Why Has the Fed Made Low Inflation a Major Goal

question 86

Multiple Choice

Why has the Fed made low inflation a major goal in recent decades?

• A)Because high inflation rates reduce the tax revenues collected by the federal government
• B)Because they wish to avoid the rapid and sustained price increases that occurred during the 1970s
• C)Because Congress passed a law in 1981 mandating the Fed to reduce the inflation rate to 2%
• D)Because high inflation rates increase the value of the dollar and make U.S. goods less competitive in foreign markets

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Definitions:

Taxable Income

The portion of an individual's or entity's income that is subject to taxation by the government after deductions and exemptions.

Oil Painting

A process of painting with pigments that are bound with a medium of drying oil, often used in artistic expressions.

Economic Income

The sum of a person or entity's annual earnings, taking into account both operational earnings and adjustments for changes in capital value.

Taxable Income

The amount of income that is subject to taxation by government authorities, after all deductions and exemptions have been applied.