If the Fed Increases the Money Supply

question 15

Multiple Choice

If the Fed increases the money supply,

• A)the interest rate increases, which tends to raise stock prices.
• B)the interest rate increases, which tends to reduce stock prices.
• C)the interest rate decreases, which tends to raise stock prices.
• D)the interest rate decreases, which tends to reduce stock prices.

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Definitions:

Service Revenue

Income earned by a company for the services it provides to its customers.

Accounts Receivable

Money owed to a business by its clients for goods or services that have been delivered but not yet paid for.

Closing Entries

These are journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts and prepare the company's books for the next period.

Permanent Accounts

These are balance sheet accounts whose balances are carried over to the next accounting period, such as assets, liabilities, and equity accounts.