In Recent Years,the Fed Has Chosen to Target Interest Rates

question 191

Multiple Choice

In recent years,the Fed has chosen to target interest rates rather than the money supply because

• A)Congress passed a law requiring them to do so.
• B)the President requested them to do so.
• C)the money supply is hard to measure with sufficient precision.
• D)changes in the interest rate change aggregate demand,but changes in the money supply do not.

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Definitions:

Taxation

The practice of collecting taxes by a government to fund public services, infrastructure, and other governmental functions.

Regulations

Rules or directives made and maintained by an authority or regulatory body to control or govern conduct within a specific area.

Production Possibilities Curve

A graphical representation showing the maximum quantity of goods and services that can be produced with a fixed amount of resources.

Efficiently

The quality of achieving maximum productivity with minimum wasted effort or expense, often used in the context of economic resource allocation.