In One of His Weekly Broadcasts,the Federal Reserve Chairman Remarked

question 20

Multiple Choice

In one of his weekly broadcasts,the Federal Reserve Chairman remarked that inflation had begun to tick upward.However,unemployment in the U.S was still quite high and economic growth had slowed.With short-term interest rates close to 0 zero) ,the Chair did not visualize that ____________ policy would be able to do anything for the high unemployment problem.He felt that _______ policy would be more useful for bolstering employment,but that would require local and state governments and the federal government to provide tax breaks for corporations?

• A)federal;state
• B)fiscal;monetary
• C)monetary;fiscal
• D)fiscal;federal

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Definitions:

Real Interest Rate

The interest rate expressed in dollars of constant value (adjusted for inflation) and equal to the nominal interest rate less the expected rate of inflation.

Nominal Interest Rate

The nominal interest rate is the interest rate before adjustments for inflation, representing the face value of borrowed money.

Equilibrium Interest Rate

The interest rate at which the quantity of money demanded equals the quantity of money supplied in the financial markets, keeping the economy stable.

R&D Spending

Expenditures dedicated to research and development efforts aimed at innovation, product development, and improvement.