Deck 1

Question 1

How is a high price earnings (P/E) viewed?

Answer 1

The P/E ratio measures the amount that investors are willing to pay for each dollar of earnings per share. Higher P/E generally indicate that investors are anticipating more growth and are bidding up the price of the shares in advance of performance

Question 2

To decrease the money supply, the Fed might:

Answer 2

1. sell government securities in the open market
2. increase the discount rate
3. increase the required reserve ratio