ʺAs the Fed Chases Inflation, Critics Shout, ʹFaster!ʹ

question 58

Multiple Choice

ʺAs the Fed Chases Inflation, Critics Shout, ʹFaster!ʹ
ʺFor weeks, the Fed has broadcast its intention to raise interest rates glacially.ʺ The Fed was moving slowly, according to an economist because ʺ... the declining price of oil, economic fundamentals, including productivity and global competition, will keep inflation in check.ʺ The Fed, recognizing that the economy was improving stated it planned to ʺrespond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.ʺ Other economists disagree with the Fedʹs restrained policy as a ʺmistakeʺ
www.nytimes, 7/1/2004
As a result of the Fedʹs policy, which of the rates will increase?

• A) the short-term interest rate
• B) the long-term interest rate
• C) the exchange rate
• D) All of the above answers are correct.

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Definitions:

Specific Performance

A legal remedy requiring a party to perform a specific act, usually in fulfillment of a contract.

Statute Of Limitations

A law prescribing a period of limitation for the bringing of certain types of legal action.

Civil Wrongs

Acts or omissions that cause harm or loss to another person, and are the basis for a lawsuit in civil court, distinct from criminal acts.

Specific Performance

A legal remedy that requires a party to fulfill their contractual obligations, rather than just paying damages.