The Impact Lag Facing the Fed Is

question 58

Multiple Choice

The impact lag facing the Fed is

• A)the delay before open market operations are able to affect the monetary base.
• B)the delay before the Fed's announcement of a new policy has an impact on the decisions of the public.
• C)the time required for monetary policy changes to affect output, employment, and prices.
• D)the delay before the impact of a recession on output and prices becomes clear to the Fed.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor.

Financial Leverage

Utilizing borrowed capital to amplify the possible returns on an investment.

Operating Leverage

An indicator of the degree to which sales growth affects operational profit, showing the ratio of a company's fixed costs compared to its variable costs.

Interest Expense

The cost incurred by an entity for borrowed funds, often reported on the income statement.