To Offset the Effect of Households and Firms Deciding to Hold

question 268

Multiple Choice

To offset the effect of households and firms deciding to hold more of their money in checking account deposits and less in currency,the Federal Reserve could

• A)raise bank taxes.
• B)sell Treasury securities.
• C)raise government spending.
• D)lower the required reserve ratio.

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Definitions:

Operating Activities

Transactions and events that affect the net income, related to the core business operations of a company.

Cost of Goods Sold

Expenditures directly resulting from the manufacturing of a company’s products for sale, comprising materials and employee wages.

Merchandise Inventory

Items purchased by a company for the purpose of being sold to customers; considered a current asset on the balance sheet.

Accounts Payable

Money owed by a company to its creditors for goods or services that have been received but not yet paid for.