If the Central Bank Targets the Interest Rate,it

question 46

Multiple Choice

If the central bank targets the interest rate,it

• A)must decrease interest rates in response to an increase in money demand.
• B)can lead to runaway inflation if maintained too rigidly.
• C)rules out the possibility of runaway inflation.
• D)Both a and c
• E)Both b and c

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Definitions:

Operating Costs

Expenses associated with the day-to-day functions of running a business, excluding capital expenditures.

Net Sales

Revenue from sales transactions after deducting returns, allowances for damaged goods, and discounts.

Assets

Resources owned or controlled by a business, expected to produce future economic benefits.

Profit Margin

A financial metric that measures the percentage of revenue remaining after all expenses have been deducted from sales.