The Three Main Monetary Policy Tools Used by the Federal

question 235

Multiple Choice

The three main monetary policy tools used by the Federal Reserve to manage the money supply are

• A)interest rates,tax rates,and government spending.
• B)tax rates,government purchases,and government transfer payments.
• C)open market operations,discount policy,and reserve requirements.
• D)open market operations,the exchange rate of the dollar against foreign currencies,and government purchases.

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Definitions:

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate revenue and expenses to the period in which they actually are applicable.

Prepaid Rent

Payments made in advance for rent that is recorded as an asset on the balance sheet until it is expensed over time as it is used.

Rent Expense

The cost incurred for using a property or equipment that is not owned by the company, typically charged on a periodic basis.

Adjusting Entry

A journal entry made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.