Which of the Following Is an Approach Used by the Fed

question 20

Multiple Choice

Which of the following is an approach used by the Fed to lessen the likelihood of inflation?

• A)Lower the reserve requirement for banks so they can loan out more money.
• B)Raise the discount rate charged to banks that borrow funds from the Fed.
• C)Buy bonds on the open market to increase the amount of money banks have to lend.
• D)Lower the federal funds rate charged to banks who want to borrow from other banks.

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Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in a net profit or loss.

Machine-Hours

An indicator of how much is produced or the level of activity in manufacturing, determined by the total hours that machinery is in use during the production process.

Job-Order Costing

A costing method used to calculate the production costs of individual units or batches of products, making it especially useful for customized orders in manufacturing or service industries.

Plantwide Overhead Rate

An overhead allocation rate applied uniformly to all products or services based on overall plant activity, ignoring individual departmental differences.