The Federal Reserve

question 2

Multiple Choice

The Federal Reserve

• A)was created in 1836.
• B)serves as a lender of last resort.
• C)was created to facilitate the federal government's collection of taxes as well as its expenditures.
• D)All of the above are correct.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Return on Stockholders' Equity

A measure of a company's profitability, calculated as net income divided by average stockholders' equity.

Income Tax Expense

The cost of income taxes, representing the taxpayer's obligation to federal, state, and sometimes local governments, based on earnings before taxes.

Interest Expense

The cost incurred by an entity for borrowed funds, typically reported on the income statement.