The Fed's Two Main Monetary Policy Targets Are

question 30

Multiple Choice

The Fed's two main monetary policy targets are

• A)the money supply and the inflation rate.
• B)the money supply and the interest rate.
• C)the interest rate and real GDP.
• D)the inflation rate and real GDP.

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Definitions:

Real Interest Rate

An interest rate fine-tuned for inflation effects, illustrating the actual charge of borrowing or the factual yield from savings deposits.

Inflation Rate

The rate of climb in the general price structure for goods and services, slashing the potency of purchasing.

CPI

Stands for Consumer Price Index, which measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

GDP Deflator

A benchmark for evaluating the price levels of all new, home-produced, end-use goods and services within an economic system.