The Fed Is Institutionally Independent

question 34

Multiple Choice

The Fed is institutionally independent.A major disadvantage of this is that monetary policy

• A)will always be coordinated with fiscal policy.
• B)is not subject to democratic control as other policies are.
• C)will never offset fiscal policy.
• D)cannot be changed once it has been instituted.

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Definitions:

Consumer Goods

Goods that are used by consumers for personal or household purposes.

Demand For Money

The desire to hold cash or liquid assets instead of investing or spending, influenced by interest rates, financial uncertainty, and economic activity.

Aggregate Demand

The full scale of demand for goods and services in an economy, specified by a common price level across a particular timeframe.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, serving as an indicator of inflation or deflation.