How Does the Fed Decide Which Monetary Measure Should Be

question 187

Multiple Choice

How does the Fed decide which monetary measure should be the focus of its monetary policy choices?

• A) The Fed would like to track a monetary measure that is most closely related to the market interest rate.
• B) The Fed would like to track a monetary measure that is most closely related to the quantity of money demanded by economic agents.
• C) The Fed would like to track a monetary measure that is most closely related to the level of real GDP and the price level.
• D) The Fed would like to track a monetary measure that is most closely related to government spending.

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Definitions:

Single Entity

A business or organization that is legally recognized as a single unit, distinct from its owners or shareholders.

Exporting

The act of sending goods or services to another country for sale.