The Fed's Difficulties in Producing Greater Monetary Control After October

question 95

Multiple Choice

The Fed's difficulties in producing greater monetary control after October 1979 were attributable to

• A)fluctuations in the economy and in financial markets.
• B)using free reserves as an operating target.
• C)the agreement with the Treasury to peg interest rates.
• D)using nonborrowed reserves as an operating target.

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Definitions:

Present Discounted Value

The present value of a future amount of money or sequence of cash inflows, calculated using a designated rate of return.

Formula

A mathematical relationship or rule expressed in symbols.

Present Value

The present worth of a sum of money or series of cash flows expected in the future, calculated using a particular rate of return.

Interest Rate

The percentage of a sum of money charged for its use, indicating the cost of borrowing money or the return on invested savings.