The Fundamental Objective of Monetary Policy Is to Assist the Economy

question 109

Multiple Choice

The fundamental objective of monetary policy is to assist the economy in achieving:

• A)a rapid pace of economic growth.
• B)a money supply which is based on the gold standard.
• C)a full-employment, noninflationary level of total output.
• D)a balanced-budget consistent with full-employment.

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Definitions:

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance government spending and obligations, considered low-risk investments.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, central bank, or other financial authority.

Actual Reserves

The total reserves held by a bank, consisting of both required reserves and any excess reserves not needed to meet central bank requirements.

Discount Rate

The Discount Rate is the interest rate set by central banks at which financial institutions can borrow reserves, influencing monetary policy and the money supply.