Adjusting Monetary Growth Based on Previous Changes in Nominal GDP

question 15

Multiple Choice

Adjusting monetary growth based on previous changes in nominal GDP

• A)is relatively easy for the Fed to undertake because the implementation lag is quite short.
• B)could be destabilizing because of the uncertainty of the length of impact lags.
• C)is an effective policy because it allows the Fed to influence future macroeconomic performance.
• D)raises the price level proportionately.

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Definitions:

Asset Account

An asset account is a ledger account that tracks the value of assets owned by an individual or organization, including tangible and intangible items of value.

Stock Dividend

A payment made in the form of additional shares rather than cash, reflecting a company's desire to reward shareholders without reducing its cash reserves.

Market Value

The current quoted price at which an asset or a service can be bought or sold in a marketplace.

Retained Earnings

The portion of net income that is not distributed to shareholders and is instead reinvested in the company.