The Fed Has the Power to Increase or Decrease the Number

question 31

Multiple Choice

The Fed has the power to increase or decrease the number of dollars in the economy through the decisions of

• A)the Board of Governors.
• B)the FOMC.
• C)the regional Federal Reserve Bank presidents.
• D)the U.S.Treasury.

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Definitions:

Cash Flow

The overall quantity of cash exchange happening in and out of a business, profoundly impacting its liquidity ratio.

Payback Rule

A capital budgeting principle that evaluates an investment based on the time needed to recoup the invested capital.

Payback Cutoff

The maximum allowable period for an investment to recoup its initial cost, beyond which it is not considered.

NPV

Net Present Value; a calculation used to determine the present value of a series of future cash flows, less the initial investment.