Which of the Following Would Cause a Reduction in M1

question 71

Multiple Choice

Which of the following would cause a reduction in M1?

• A)an increase in the required ratio of reserves to deposits
• B)a reduction in the discount rate
• C)an open market operation where the Fed sells bonds
• D)all of the above
• E) none of the above

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing the profit a company makes from its operations, before non-operating incomes and expenses.

Residual Income

Income that remains after all operating expenses and costs of capital have been subtracted from revenues.

Minimum Return

The lowest acceptable rate of return on an investment, often used to guide financial decisions and risk management strategies.

Transfer Prices

Prices charged for goods, services or intangible property transferred within an organization between divisions or subsidiaries.