Monetary Policy Produces Ripple Effects, Some of Which Happen Quickly

question 2

Multiple Choice

Monetary policy produces ripple effects, some of which happen quickly and some that can take years to produce change. Which of the following takes the longest to change? The

• A) inflation rate.
• B) federal funds rate.
• C) exchange rate.
• D) monetary base.

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Definitions:

Estimable

Capable of being estimated or approximately calculated.

Note Discounted

A financial term referring to a promissory note that is sold for less than its face value before it reaches maturity.

Interest Calculations

The process of figuring out the amount of interest to be added to the principal amount of a loan or deposit, based on the rate and the time.

Payment Maturity

The date on which a financial obligation must be repaid in full.