Which of the Following Is an Appropriate Definition of the Target

question 69

Multiple Choice

Which of the following is an appropriate definition of the target inflation rate?

• A)The inflation rate at which unemployment is zero
• B)The central bank's goal for the average rate of inflation over the short run
• C)The central bank's goal for the average rate of inflation over the long run
• D)The inflation rate at which net exports are maximized
• E)None of these

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Definitions:

Federal Funds Target Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, set by the Federal Reserve to influence economic conditions.

Government Bonds

Debt securities issued by a government to finance its expenditures, typically featuring a fixed interest rate and maturity date.

Interest Rates

Represents the charge or payment for the use of money, often expressed as an annual percentage of the loan or investment amount.

Stock Market Boom

A period of significant and rapid increases in the value of shares traded on stock exchanges, often reflecting optimism about the economy.