If a Central Bank Were to Set an Interest Rate

question 7

Multiple Choice

If a central bank were to set an interest rate target and stick to it,

• A)much of the economy's instability would be eliminated
• B)the central bank would no longer be able to control money supply
• C)the central bank would never be able to provide sufficient money for economic growth to get the economy out of a recession
• D)inflation would no longer be a problem since the central bank would have credibility
• E)velocity would become very stable even in the short run

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Definitions:

Personal/Rental Property

Assets owned by an individual that can either be used for personal purposes or rented out to generate income.

Net Loss

The result when a company's total expenses exceed its total revenues, indicating a negative profit for the accounting period.

Gross Rental Income

The total income received from renting out a property before any expenses are deducted.

Schedule E

A tax form used to report income or loss from rental property, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.