If a Government Wanted to Use Monetary Policy to Increase

question 79

Multiple Choice

If a government wanted to use monetary policy to increase economic growth, which of the following steps should be taken?

• A) Decrease interest rates to increase the amount of money in supply.
• B) Increase the amount of foreign currency kept on reserve in U.S. banks.
• C) Increase the amount of public revenue for investment by raising taxes.
• D) Increase the government spending on public works projects.
• E) Print a larger amount of money to increase the money supply.

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Definitions:

Investment Proposal

A formal suggestion for investing capital, typically encompassing projected costs, benefits, risks, and returns.

Net Present Value

A method used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and outflows over a period of time.

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading its cost over its useful life.

Net Present Value

A financial measure that determines the variance between the current worth of cash coming in and the current worth of cash going out over a specified timeframe.