Which of the Following Arguments Is Not Used to Argue

question 20

Multiple Choice

Which of the following arguments is not used to argue against the Fed attempting to keep interest and exchange rates stable?

• A)Maintaining stable interest rates in the face of a fluctuating demand for money is not really within the capabilities of the Fed.
• B)Keeping interest rates fixed for too long can actually lead to a financial crisis.
• C)Stable exchange rates between nations that are very different may be problematic in the long run.
• D)Stable exchange rates can rarely be expected to lead to higher levels of global trade.

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Definitions:

Production Possibilities

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, technology, etc.).

Trade-offs

Situations where making a decision to gain something entails losing something else, typically requiring a compromise or balancing act.

Technology

The application of scientific knowledge for practical purposes, especially in industry and improvements in tools, machinery, and systems.