If the Fed Had to Choose Between Fixing the Interest

question 45

Multiple Choice

If the Fed had to choose between fixing the interest rate and fixing the supply of money,it would

• A)always fix the money supply,so that the price level would be stable
• B)always fix the money supply,so that spending would be stable
• C)always fix the interest rate,so that investment would be stable
• D)always fix the interest rate,so that demand for money would be stable
• E)find neither alternative would be clearly better than the other

---

Definitions:

Post-Closing Trial Balance

A financial statement listing all the accounts and their balances after closing entries are made, ensuring the accounts are ready for the next accounting period.

Adjusted Trial Balance

A report that lists all accounts and their balances after adjusting entries are made, ensuring that debits equal credits.

Closing Entries

The journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.

Adjusting Entries

Accounting entries recorded at the conclusion of a financial period to properly assign income and expenses to the period they truly relate to.