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AICPA CPA-Business Exam - Topic 2 Question 79 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 79
Topic #: 2
[All CPA-Business Questions]

To address the problem of a recession, the Federal Reserve Bank most likely would take which of the following actions?

Show Suggested Answer Hide Answer
Suggested Answer: C

Choice 'c' is correct. Return on investment equals net income divided by average invested capital:

Choices 'a', 'b', and 'd' are incorrect, per the above calculation.


by Chantell at Dec 22, 2023, 12:59 AM

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Shantell
4 months ago
D would just tighten things up even more, not helpful!
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Joanna
5 months ago
Wait, lowering the discount rate? Is that really enough?
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Colette
5 months ago
C would just make things worse, right?
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Aracelis
5 months ago
I disagree, B would make more sense in a recession.
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Bobbie
5 months ago
A is definitely the right move!
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Larae
6 months ago
I feel like increasing reserve requirements would actually restrict lending, which isn't what we want during a recession, right?
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Kristine
6 months ago
Increasing the federal funds rate seems counterintuitive in a recession, but I can't recall the exact reasoning behind it.
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Anglea
6 months ago
I remember a practice question where selling government bonds was the right answer for tightening the economy, but that doesn't seem to fit here.
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Bette
6 months ago
I think lowering the discount rate makes sense during a recession to encourage banks to lend more, but I'm not entirely sure.
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Noah
6 months ago
I feel pretty confident that the answer is B - selling U.S. government bonds. That would tighten the money supply and help curb inflation during a recession.
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Freeman
6 months ago
I'm a bit confused on this one. The Fed has a few different monetary policy tools, but I'm not certain which one would be most effective for addressing a recession. I'll have to review my notes.
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Gail
6 months ago
Okay, I've got this. The Fed would want to increase the money supply to boost economic activity, so the right answer is A - lowering the discount rate.
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Novella
6 months ago
Hmm, this is a tricky one. I'm not totally sure about the Fed's toolkit for recessions. I'll have to think through the options carefully.
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Aide
6 months ago
I think the key here is to focus on the Federal Reserve's typical actions to address a recession. Lowering the discount rate seems like the most direct way to stimulate the economy.
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Lon
6 months ago
This looks like a pretty straightforward disaster recovery question. I think I can handle this one - the key is to identify the solution that meets all the requirements like cost optimization, guaranteed capacity, and the RPO/RTO targets.
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Chau
6 months ago
I recall that standard deviation isn't a measure of central tendency, but isn't it often confused with the mean? Feels tricky!
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Ming
6 months ago
Hmm, I'm not too sure about this one. I'll need to review my notes on WiFi security protocols before making a decision. Better play it safe and mark this one for review.
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Sharen
6 months ago
I feel like option B might give too many privileges to Rubio and Doe. I think options A or D limit access better, but I'm leaning towards A.
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Jules
11 months ago
Hmm, the Fed lowering rates to address a recession? What is this, the 1980s?
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Lisbeth
10 months ago
D) Increase the level of funds a bank is legally required to hold in reserve.
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Staci
10 months ago
B) Sell U.S. government bonds in open-market transactions.
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Miss
10 months ago
A) Lower the discount rate it charges to banks for loans.
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Bettina
12 months ago
I was going to say C) Increase the federal funds rate, but that would be counterproductive in a recession. Gotta love these tricky Fed questions!
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Charlesetta
10 months ago
A) Lower the discount rate it charges to banks for loans.
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Kristine
10 months ago
Increasing reserve requirements could actually worsen a recession by limiting lending.
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Charolette
10 months ago
D) Increase the level of funds a bank is legally required to hold in reserve.
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Kristine
10 months ago
Selling bonds can also inject money into the economy, good choice!
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Yolande
10 months ago
B) Sell U.S. government bonds in open-market transactions.
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Nicolette
10 months ago
That's correct! Lowering the discount rate can help stimulate borrowing and spending.
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Katy
11 months ago
A) Lower the discount rate it charges to banks for loans.
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Paris
12 months ago
D) Increasing the reserve requirement is a way to tighten the money supply, but I don't think that's the best approach during a recession.
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Valentin
12 months ago
But wouldn't selling bonds decrease the money supply and potentially worsen the recession?
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Malika
12 months ago
I disagree, I believe the answer is B) Sell U.S. government bonds.
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Valentin
12 months ago
I think the answer is A) Lower the discount rate.
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Fernanda
12 months ago
B) Selling U.S. government bonds seems like the right move to me. That would reduce the money supply and help curb inflation.
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Alline
11 months ago
B) Selling U.S. government bonds could indeed help reduce the money supply and control inflation.
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Sylvie
11 months ago
A) Lowering the discount rate could also stimulate borrowing and spending, which could help boost the economy.
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Ernie
11 months ago
B) Selling U.S. government bonds could indeed help reduce the money supply and control inflation.
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Ma
11 months ago
A) Lowering the discount rate could also stimulate borrowing and spending, which could help boost the economy.
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Marisha
12 months ago
That's a good point, selling bonds could also help stimulate the economy.
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Sylvie
12 months ago
I disagree, I believe they would sell U.S. government bonds in open-market transactions to address the recession.
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Marisha
1 year ago
I think the Federal Reserve Bank would lower the discount rate to help with a recession.
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Jaclyn
1 year ago
I think the answer is A) Lower the discount rate. The Federal Reserve typically lowers interest rates to stimulate the economy during a recession.
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Dean
10 months ago
Increasing the level of funds banks are required to hold in reserve could restrict lending.
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Brynn
11 months ago
Increasing the federal funds rate might have the opposite effect.
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Socorro
11 months ago
But selling U.S. government bonds could also be a way to address a recession.
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Twana
12 months ago
I agree, lowering the discount rate can help stimulate the economy.
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