When the Fed Embarked on a Policy Known as Quantitative

question 53

Multiple Choice

When the Fed embarked on a policy known as quantitative easing,they

• A)slowly lowered the federal funds rate target until it was equal to zero.
• B)reduced the required reserve ratio by one-quarter point per month for 12 months.
• C)bought longer-term securities than are usually bought in open market operations.
• D)opened up lending to primary dealers,commercial banks,and investment banks.

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Definitions:

Adjusting Entry

Refers to adjustments made in the books of accounts to record expenses or revenues that have occurred but are not accurately represented in financial statements.

Write Off

The act of removing an asset from the financial statements due to its impairment or irrelevance, recognizing it as a loss.

Estimated Bad Debts

An account on the financial statements estimating the amount of receivables that a company does not expect to collect.

Percentage of Sales Method

An accounting technique used to estimate bad debts or the allowance for doubtful accounts based on a predetermined percentage of sales.