Which of the Following Policy Innovations Is Most Likely to Be

question 11

Multiple Choice

Which of the following policy innovations is most likely to be implemented?

• A) A noncontroversial policy that can be enacted by one agency.
• B) A policy that needs considerable resources, but does not change the status quo.
• C) A vague policy that requires cooperation between different agencies.
• D) A policy that has many, clearly defined tasks.

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Definitions:

Large Denomination Time Deposits

Time deposits in a bank or financial institution with a large minimum amount of money required, typically over $100,000, and a fixed term.

M2

A measure of the money supply that includes cash, checking deposits, and easily convertible near money, such as savings deposits, small time deposits, and money market mutual funds.

M3

A measure of the money supply that includes M2 plus large time deposits, institutional money market funds, and other larger liquid assets.

Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, aimed at controlling the money supply and banking stability.