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AICPA Exam CPA-Business 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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Jules
2 months ago
Hmm, the Fed lowering rates to address a recession? What is this, the 1980s?
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Lisbeth
1 months ago
D) Increase the level of funds a bank is legally required to hold in reserve.
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Staci
2 months ago
B) Sell U.S. government bonds in open-market transactions.
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Miss
2 months ago
A) Lower the discount rate it charges to banks for loans.
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Bettina
3 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
26 days ago
A) Lower the discount rate it charges to banks for loans.
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Kristine
27 days ago
Increasing reserve requirements could actually worsen a recession by limiting lending.
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Charolette
28 days ago
D) Increase the level of funds a bank is legally required to hold in reserve.
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Kristine
29 days ago
Selling bonds can also inject money into the economy, good choice!
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Yolande
1 months ago
B) Sell U.S. government bonds in open-market transactions.
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Nicolette
1 months ago
That's correct! Lowering the discount rate can help stimulate borrowing and spending.
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Katy
2 months ago
A) Lower the discount rate it charges to banks for loans.
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Paris
3 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
3 months ago
But wouldn't selling bonds decrease the money supply and potentially worsen the recession?
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Malika
3 months ago
I disagree, I believe the answer is B) Sell U.S. government bonds.
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Valentin
3 months ago
I think the answer is A) Lower the discount rate.
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Fernanda
3 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
2 months ago
B) Selling U.S. government bonds could indeed help reduce the money supply and control inflation.
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Sylvie
2 months ago
A) Lowering the discount rate could also stimulate borrowing and spending, which could help boost the economy.
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Ernie
2 months ago
B) Selling U.S. government bonds could indeed help reduce the money supply and control inflation.
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Ma
2 months ago
A) Lowering the discount rate could also stimulate borrowing and spending, which could help boost the economy.
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Marisha
3 months ago
That's a good point, selling bonds could also help stimulate the economy.
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Sylvie
3 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
3 months ago
I think the Federal Reserve Bank would lower the discount rate to help with a recession.
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Jaclyn
3 months 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
2 months ago
Increasing the level of funds banks are required to hold in reserve could restrict lending.
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Brynn
2 months ago
Increasing the federal funds rate might have the opposite effect.
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Socorro
3 months ago
But selling U.S. government bonds could also be a way to address a recession.
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Twana
3 months ago
I agree, lowering the discount rate can help stimulate the economy.
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