The Fed Responds to Money Demand Shocks by

question 127

Multiple Choice

The Fed responds to money demand shocks by

• A) changing the velocity of money
• B) changing the money supply
• C) following the money creation rules responsible for its success in the past two decades
• D) increasing the required reserve ratio
• E) changing its definition of the natural rate of unemployment

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Definitions:

Assignable Variation

Variation in a production process that can be traced to specific causes.

Operating Characteristics

These refer to the performance metrics and behavior of a system under specified conditions.

Natural Variations

Random fluctuations in the output or process of a system that are inherent and unavoidable.

Consumer's Risk

The probability that a defective product will pass through a quality inspection process and reach the consumer.