Answer:
bonds issued $2,300,000
coupon rate 8%
5 year to maturity
sold at face value
1. Prepare the journal entry to record the sale of these bonds on January 1, 2019.
January 1, 2019, 5 year bonds issued at face value
Dr Cash 2,300,000
Cr Bonds payable 2,300,000
2. Prepare the adjusting journal entry on December 31, 2019, to record interest expense.
December 31, 2019, accrued interests on bonds payable
Dr Interest expense 184,000
Cr Interest payable - bonds payable 184,000
3. Prepare the journal entry on January 1, 2020, to record interest paid.
January 1, 2020, payment of interest on bonds payable
Dr Interest payable - bonds payable 184,000
Cr Cash 184,000
Answer:
Lowering the banks' reserve requirement (option C) is an example of the Fed's <u>expansionary monetary policy</u> tool.
Explanation:
<h3>General Concepts:</h3>
Monetary policy.
Expansionary monetary policy.
Contractionary monetary policy.
Open market operations.
Open market sale.
<h2>What is a Monetary Policy?</h2>
The Federal Reserve (or the Fed) implements its monetary policy by increasing or lowering the nation's money supply to achieve macroeconomic goals. The two types of monetary policies are <em>expansionary</em> and <em>contractionary</em> <em>monetary policies</em>.
<h3>Expansionary Monetary Policy</h3>
The Fed implements an expansionary monetary policy during periods of <em>recession</em> to increase the nation's money supply and stimulate aggregate demand for goods and services. The Fed has the following tools to implement its expansionary monetary policy:
- Purchasing of government securities through the Federal Open Market Committee's (FOMC) <u>open market operations</u> (OMO). The OMO increases the banks' reserve account, which allows the latter to loan its <em>excess reserves</em>.
- Lowering the reserve requirement means that the depository institutions will only have to maintain a lesser fraction of their <em>checkable deposits</em>. This allows banks to loan their excess reserves, thereby stimulating investment and consumer spending.
- Lowering the discount rate below the <em>federal funds rate</em> enables<em> reserve deficient </em>depository institutions to acquire a <u>discount loan</u> from The Fed at a lower <em>discount rate</em>.
<h3>Contractionary Monetary Policy</h3>
The Fed implements a contractionary monetary policy during periods of <em>inflation</em>, which decreases the nation's money supply and slows down economic growth. The following are the Fed's tools for implementing its contractionary monetary policy:
- The FOMC's open market sale of U.S. Treasury securities decreases the depository institutions' reserve account, and reduces the monetary base. Consequently, the banks will have lesser reserves to loan to borrowers.
- Increasing the required reserve ratio implies that the banks must maintain a larger portion of its required reserves. This action increases the cost of loaning funds from other banks through the <em>federal funds market</em>, which discourages consumer and investment spending.
- Increasing the discount rate above the federal funds rate discourages banks to acquire discount loans from the Fed. The banks' repayment of previous discount loans to the Fed also decreases the money supply.
<h2>Final Answer:</h2>
We can infer that lowering the banks' reserve requirement (option C) is an example of the Fed's <u>expansionary monetary policy</u> tool.
<h3>______________________</h3>
Learn more about monetary policy: brainly.com/question/13926715
Learn more about expansionary and contractionary monetary policies:
brainly.com/question/9046840
Debit: Your money that is actually yours.
Credit: The banks money that they give you kindove like a loan but not exactly.
Bank: Open to everyone but both have you keep
an account of money.
Credit Union: Only open to a certain group of people but both have u keep an account of money.
<span>A certificate of deposit has the lowest liquidity because the money that is deposited is normally inaccessible during the term of the certificate. As liquidity refers to the availability of accessing the funds outside of the investment schedule, a certificate of deposit cannot be loaned against, cashed out, nor does it pay out any interest or dividends until the certificate reaches its maturity date.</span>