Which of the Following Is Not Necessarily a Desirable Characteristic

question 6

Multiple Choice

Which of the following is not necessarily a desirable characteristic of an intermediate target variable?

• A)The variable should be a monetary aggregate.
• B)The variable should be reliably, and thus predictably, related to the goal variables.
• C)Policymakers should be able to observe the intermediate target regularly.
• D)The Fed should be able to hit the targeted range of the intermediate variable.

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Definitions:

Price-Taker Industry

An industry in which individual firms have no control over the price of their product because the product is standardized, leading them to accept the prevailing market price.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the extent to which a firm exceeds the opportunity cost of its resources.

Market Adjustment

Market Adjustment refers to the changes in price levels and economic variables in response to supply and demand dynamics.

Economic Losses

The difference when total costs exceed total revenues, indicating that a business is not profitable.