Between 1970 and 2000, If the Fed Had Tried to Hit

question 67

Multiple Choice

Between 1970 and 2000, if the Fed had tried to hit the money growth targets:

• A) the economy would have likely experienced very high inflation.
• B) the federal funds rate would have changed often and by large amounts.
• C) the interest rates would have likely been more stable.
• D) the economy would have likely experienced very high inflation but the interest rates would have likely been more stable.

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Definitions:

Stable Preferences

The assumption in economic theory that consumers' tastes, preferences, and choices remain constant over time.

Behavioral Economics

A field of economics that examines how psychological, cognitive, emotional, cultural, and social factors affect economic decisions of individuals and institutions.

Cash Registers

Mechanical or electronic devices used in shops to calculate and record sales transactions, and to store money.

Impulse

Impulse refers to a sudden desire or change in motion, often used in physics to describe the change in momentum resulting from a force applied over time, but also applicable to spontaneous decisions in human behavior.