Monetary Policy Has Two Objectives

question 21

Multiple Choice

Monetary policy has two objectives:

• A)to ensure that sufficient money and credit are available to meet the needs of the economy and to minimize fluctuations-recessions and inflationary booms-around a long-term trend.
• B)to ensure full employment and low interest rates.
• C)to reduce the costs of government deficit spending and keep interest rates low.
• D)to monetize all government spending and keep unemployment below 6 percent.

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Definitions:

Net Income

The amount of money a company earns after deducting all expenses and tax obligations from its revenues.

Identifiable Net Assets (INA) Method

A valuation method in mergers and acquisitions that calculates the fair value of a company's net assets, excluding goodwill.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing items like brand name, good customer relations, and reputation.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, representing what the shareholders own outright.