What Actions Could the Federal Reserve Take to Achieve Consistent

question 140

Multiple Choice

What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?

• A)The Fed could increase the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
• B)The Fed could maintain a growth rate of the money supply of 4 percent,regardless of whether inflation was rising or falling in the economy.
• C)The Fed could follow contractionary monetary policy that would reduce the federal funds rate to zero so investment will rise consistently.
• D)The Fed has no direct control over real GDP in the long run,so there are no actions it could take to achieve that goal.

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Definitions:

Consciousness

The mind’s level of responsiveness to impressions made by the senses.

Information Integration

The process by which the brain combines information from various sources, including sensory, cognitive, and emotional inputs, to form a coherent understanding of the environment.

Synaptic Organization

The arrangement and interaction of synapses within the nervous system, which dictates how neurons communicate.

Interoception

The sense of the physiological condition of the body, including hunger, thirst, heartbeat, and pain.