Compared to the Other Tools the Fed Uses to Change

question 25

Multiple Choice

Compared to the other tools the Fed uses to change the money supply, the discount window is used:

• A) less often than open market operations, but more often than the reserve requirement.
• B) more often than open market operations and the reserve requirement.
• C) about the same as open market operations, but more often than the reserve requirement.
• D) more often than open market operations, and about the same as the reserve requirement.

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Definitions:

Unit Sales

The quantity of products sold, typically measured on a per-unit basis.

Margin Of Safety

The difference between actual sales and the break-even point, indicating how much sales can fall before a business incurs a loss.

Net Operating Income

Earnings resulting from the standard operations of a business, without considering taxes and interest expenses.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.