Which of the Following Is the Fed's Best Strategy for Dealing

question 53

Multiple Choice

Which of the following is the Fed's best strategy for dealing with shifts of the money demand curve?

• A) A neutralization response
• B) Decrease the money supply
• C) Maintain a constant money value target
• D) Maintain a money supply target
• E) Increase the interest rate.

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Definitions:

Effective

Producing a decided, decisive, or desired effect; efficiency in producing a desired result.

RMS

Root Mean Square, a statistical measure of the magnitude of a varying quantity, often used to compute the effective value of an alternating current or voltage.

Apparent

Refers to the apparent power in an AC circuit, combining both the real (true) power and reactive power, measured in volt-amperes (VA).

Inductive

Pertaining to the property of inductance, where a change in electric current through a conductor induces an electromotive force in both the conductor itself and any nearby conductors.