To Determine Whether the Goal of Stable Prices Is Being

question 22

Multiple Choice

To determine whether the goal of stable prices is being achieved, the Federal Reserve monitors

• A)the GDP price deflator.
• B)the core PCE deflator inflation rate.
• C)the producer price index.
• D)the CPI.
• E)the core GDP deflator inflation rate.

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Definitions:

Investment-Accelerator Effects

The phenomenon where an increase in national income or output leads to a disproportionately larger increase in investment expenditure.

Money Supply

The entire financial resource sum in an economy at a particular time.

Owning Stocks

Owning stocks means having equity or ownership in a corporation, granting the shareholder a claim on the company's assets and earnings, often accompanied by voting rights on corporate matters.

Liquidity Preference Theory

A theory which suggests that people prefer to hold their wealth in liquid form for immediate use rather than in longer-term investments, affecting interest rates and economic activity.