In Deciding on a Policy,the Fed Is Faced with Two

question 2

Multiple Choice

In deciding on a policy,the Fed is faced with two difficult problems: The inability of experts to agree on the best measure of the degree of tightness of monetary policy and

• A) a lack of data on financial markets.
• B) a need for approval from Congress and the president.
• C) the long lag between an action taken by the Fed and its effect on the economy.
• D) an inability to decide on a proper definition of the monetary base.
• E) the lack of an adequate research staff.

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Definitions:

New Share

A unit of equity representing ownership in a corporation that has been issued to investors for the first time, increasing the total number of outstanding shares.

Outstanding Shares

Shares of a corporation's stock that are currently owned by all shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Homemade Dividends

A concept whereby investors create their own dividend policy by selling a portion of the shares they own to generate cash, rather than relying on company-issued dividends.

Financial Engineering

The use of mathematical techniques and models to solve financial problems or to create financial products.