As Shown by the IS-LM Model,there Are Two Reasons That

question 14

Multiple Choice

As shown by the IS-LM model,there are two reasons that the Fed can lose control of the economy.One of these reasons is

• A)federal funds rate can never reach zero percent.
• B)zero federal funds rate is not sustainable.
• C)household and business borrowers do not base their decision to borrow on interest rates.
• D)that the zero federal funds rate achieved by the Fed is irrelevant to household and business borrowers.

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Definitions:

Average Operating Assets

The average value of the assets used in the day-to-day operations of a business, calculated over a certain period of time.

Sales

The total revenue generated from selling goods or services.

Variable Expenses

Costs that vary in direct proportion with the level of production or sales volume, such as raw materials and sales commissions.

Traceable Fixed Expenses

Fixed costs that are directly associated with a specific department or product, and can be directly traced to it.