When the Fed Adopts a Contractionary Monetary Policy, the Interest

question 30

Multiple Choice

When the Fed adopts a contractionary monetary policy, the interest rate at which the Fed lends to other banks will be expected to _____and the money supply in the economy would be expected to _____.

• A)decrease; decrease
• B)decrease; increase
• C)increase; decrease
• D)increase; increase

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Definitions:

Exchange Gain

The gain resulting from a favorable change in exchange rates affecting the value of foreign currency transactions.

Accounts Receivable

Money owed by customers to a company for goods or services that have been delivered or used but not yet paid for.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, usually the local currency or the currency of the main revenue-generating activities.

Translation Rate

The exchange rate used to convert the financial statements of a foreign subsidiary into the currency of the parent company.