Monetary Policy Includes

question 29

Multiple Choice

Monetary policy includes

• A) using changes in the rate at which new money is put into circulation to alter national economic variables.
• B) using changes in the size of the federal budget deficit to alter national economic variables.
• C) regulating tax rates to ensure controlled growth and low inflation.
• D) the economic policies of the president and Congress.
• E) linkage of the consumer price index and the gross national product.

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Definitions:

Current Account Deficit

is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the products it exports.

Foreign Indebtedness

The total amount of debt a country owes to foreign creditors.

Fixed Exchange Rates

A currency system where the value of a currency is set at a predetermined rate relative to other currencies, instead of fluctuating in the open market.

Exchange Controls

Restrictions that a government may impose over the quantity of foreign currency demand by its citizens and firms and over the rate of exchange as a way to limit the nation’s quantity of outpayments relative to its quantity of inpayments (in order to eliminate a payments deficit).