Which of the Following Is True

question 52

Multiple Choice

Which of the following is true?

• A)The Fed sets growth target ranges for several aggregates in order to be absolutely certain they are correct.
• B)Since the early 2000s, the Fed no longer sets growth target ranges for the aggregates because of the instability of the relationship between changes in the aggregates and changes in economic activity.
• C)The Fed uses M1 primarily in the execution of monetary policy because it is the aggregate most widely used to make transactions.
• D)The Fed now sets rigid growth rate rules to limit the degree of discretionary monetary policy.

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Definitions:

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified timeframe.

In-The-Money

A term used in options trading to describe an option that has intrinsic value, where the strike price is favorable compared to the current market price of the underlying asset.

Stock Price

The current price at which a share of a company is being bought or sold in the stock market.

Exercise Price

The price at which the holder of an option can buy (in the case of a call) or sell (in the case of a put) the underlying security or commodity.