Fed Policy Since the Early 1990s Indicates That It Is

question 33

Multiple Choice

Fed policy since the early 1990s indicates that it is pursuing a policy of targeting the

• A)monetary base.
• B)money supply.
• C)federal funds interest rate.
• D)exchange rate.

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Definitions:

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other inputs remain constant.

Fixed Inputs

Resources used in production that cannot be easily increased or decreased in the short term, such as buildings or machinery.

Variable Inputs

Resources or factors of production whose quantity can be changed in the short term to influence output.

Fixed

Fixed typically refers to costs or assets that do not change in the short term, regardless of the level of output or activity.