"Monetary Policy Can Be Described Either in Terms of the Money

question 51

Multiple Choice

"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that

• A)shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate.
• B)the aggregate-demand curve will not shift in response to Federal Reserve actions if the Fed decides to target an interest rate.
• C)changes in monetary policy aimed at contracting aggregate demand can be described either as decreasing the money supply or as raising the interest rate.
• D)the activities of the Federal Reserve's bond traders are irrelevant if the Federal Reserve decides to target an interest rate.

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