If the Interest Rate Is Below the Fed's Target,the Fed

question 109

Multiple Choice

If the interest rate is below the Fed's target,the Fed should

• A)buy bonds to increase bank reserves.
• B)buy bonds to decrease bank reserves.
• C)sell bonds to increase bank reserves.
• D)sell bonds to decrease bank reserves.

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Definitions:

Cash Short and Over

An account that tracks discrepancies between the expected cash amount and the actual amount received or disbursed.

Control Environment

The set of standards, processes, and structures that provide the foundation for carrying out internal control across the organization, influencing the overall attitude, awareness, and actions concerning the internal control system and its importance to the entity.

Internal Control

Processes and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Reasonable Assurance

A level of confidence that the controls in place in an organization are adequate to mitigate risks to an acceptable level.