If the Monetary Growth Rate Is Far Above the Target

question 6

Multiple Choice

If the monetary growth rate is far above the target range previously announced by the Fed, financial investors are likely to assume that future interest rates will increase since

• A)the Fed is likely to reduce money supply soon
• B)inflation will start to increase
• C)borrowing will increase in anticipation of higher inflation
• D)all of these are possible
• E)none of these are possible

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Definitions:

Millivolts

A unit of electric potential or electromotive force equal to one thousandth of a volt, commonly used in measuring electrical potentials in cells and batteries.

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.

Reflexes

Involuntary and nearly instantaneous movements in response to stimuli, as part of the body's protective mechanism.

Medulla Oblongata

The lowest section of the brainstem, controlling autonomic functions such as breathing and heart rate.