When Banks Hold a Large Amount of Excess Reserves, Which

question 230

Multiple Choice

When banks hold a large amount of excess reserves, which of the following tools would the Fed most likely use when it wants to increase the interest rate?

• A) raising the reserve requirement
• B) raising the interest rate it pays to banks on their reserves
• C) raising the discount rate
• D) making an open market purchase

Recognize the key accounting assumptions and how they affect financial reporting.

Identify the characteristics and implications of different types of accounting periods.

Comprehend the principles guiding revenue and expense recognition.

Discern between different accounting methodologies (accrual vs. cash basis) and their acceptance under GAAP.

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