The Fed Uses the Term Target When It Announces How

question 202

Multiple Choice

The Fed uses the term target when it announces how it intends to change the federal funds rate because

• A)the change in the interest rate is a new law that all banks must adhere to.
• B)the Fed has no influence over the federal funds rate.
• C)the Fed can control the real interest rate but has no control over the nominal interest rate.
• D)the Fed expects the U.S.Treasury to conform with its monetary policy.
• E)the Fed has no direct control over interest rates and can only influence rates toward a target value.

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Definitions:

Japanese Goods

Products that are manufactured or produced in Japan, often associated with high quality, innovation, and technology.

GDP

Gross Domestic Product, the total value of all goods and services produced within a country's borders in a specific time period, used as a broad measure of economic performance.

Absolute Advantage

The ability of a party to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.

Comparative Advantage

The capability of an entity to generate a product or service with a smaller opportunity cost compared to another entity.