Although Economists Have Argued Many Years About the Identity of Appropriate

question 50

Multiple Choice

Although economists have argued many years about the identity of appropriate operating and intermediate target variables, there is no dispute about the chief characteristics of a suitable operating or intermediate target. Which of the below is NOT a chief characteristic?

• A) linkage (an expected connection with the intermediate target)
• B) objectivity (decision-making eliminates personal experiences)
• C) observability (targets must be readily and regularly observable economic variables)
• D) responsiveness (respond quickly and in an expected way to the Fed's use of its tools)

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Definitions:

Reasonably Possible

A term used in accounting and finance to denote outcomes that are more than a remote possibility but less likely than probable.

Estimable

Capable of being estimated or approximately calculated.

Note Discounted

A financial term referring to a promissory note that is sold for less than its face value before it reaches maturity.

Interest Calculations

The process of figuring out the amount of interest to be added to the principal amount of a loan or deposit, based on the rate and the time.