The Fed Prefers to Focus on the Interest Rate Rather

question 94

Multiple Choice

The Fed prefers to focus on the interest rate rather than growth in the money supply because

• A)it does not like to conduct open market operations.
• B)the money supply is too unpredictable.
• C)it makes inflation more predictable.
• D)money demand is too volatile.
• E)it is easier to fix the interest rate than maintain growth in the money supply.

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Definitions:

Offspring

The product of reproduction, a new organism produced by one or more parents.

Population Size

The number of individuals in a species or specific group of living organisms inhabiting a particular geographic area.

Increase Or Decrease

A phrase referring to the action of becoming larger or smaller in size, amount, intensity, or degree.

Natural Selection

The process by which organisms that are better adapted to their environment tend to survive and produce more offspring.