If the Fed Targets the Interest Rate,then

question 140

Multiple Choice

If the Fed targets the interest rate,then:

• A)the money supply will grow at a more controlled rate.
• B)monetary policy will reinforce fluctuations in economic activity.
• C)the price level will be more stable in the long run.
• D)money demand will be more stable.
• E)velocity will be less stable.

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Definitions:

Cognitive

Relating to mental processes such as perception, memory, thought, and problem-solving.

Physical Changes

Alterations in the form, appearance, or state of a substance that do not change its chemical composition.

Compulsion

A repetitive and seemingly purposeful behavior performed in response to an obsession or according to rules that must be rigidly followed.

Ritualized Behaviors

Actions performed in a prescribed manner that are often symbolic and are part of a larger cultural or religious practice.