The Federal Open Market Committee

question 30

Multiple Choice

The Federal Open Market Committee

• A)by law must focus on maintaining low inflation rather than stabilizing output.
• B)by law must focus on stabilizing output rather than maintaining low inflation.
• C)by law must follow a mechanical rule that takes into account deviations of unemployment from its natural rate and deviations of inflation from a target.
• D)operates with almost complete discretion over monetary policy.

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Definitions:

Foreign Assets

Investments in foreign countries, including stocks, bonds, real estate, or direct investments in business ventures.

Current Account

Part of a country's balance of payments, it includes the trade balance, net income from abroad, and net current transfers.

Capital Account

A national account that records transactions involving the purchase and sale of assets, such as property rights and stocks, between residents and non-residents.

Personal Savings Rate

The percentage of personal disposable income that is saved by households rather than spent on consumption.