Use the Following to Answer Questions

question 227

Multiple Choice

Use the following to answer questions :
Figure: The Money Supply and Aggregate Demand
-(Figure: The Money Supply and Aggregate Demand) Look at the figure The Money Supply and Aggregate Demand. If the Federal Reserve intended to encourage investment and expand the economy, it would _____ Treasury bills, _____ the money supply, and _____ interest rates. This is shown in panel _____.

• A)buy; increase; lower; (a)
• B)sell; increase; lower; (b)
• C)buy; decrease; lower; (a)
• D)buy; increase; raise; (a)

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Definitions:

Equity Issue

An equity issue is the release of new shares by a company to the public or certain investors to raise capital.

Debt Outstanding

The total amount of debt that a company or government has yet to repay.

Capital Budgeting

The process of evaluating and selecting long-term investments that are consistent with the firm's goal of wealth maximization.

Fixed Assets

Long-term assets used in the operation of a business, not expected to be converted into cash within a year, such as buildings and machinery.