What Actions Could the Federal Reserve Take to Achieve Consistent

question 73

Multiple Choice

What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?

• A)The Fed could increase in the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
• B)The Fed could maintain a growth rate of the money supply of 4 percent,regardless of whether inflation was rising or falling in the economy.
• C)The Fed could follow contractionary monetary policy that would reduce the federal funds rate to zero so investment will rise consistently.
• D)The Fed has no direct control over real GDP in the long run,so there are no actions it could take to achieve that goal.

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Definitions:

Jurisdiction

The official power to make legal decisions and judgments, often within a defined geographical area or over certain types of legal cases.

Concurrent Jurisdiction

Jurisdiction that exists when two different courts have the power to hear a case. For example, some cases can be heard in either a federal or a state court.

Federal Court

A court established by the federal government of a country, having jurisdiction over matters that fall within federal law.

Remedies

The means by which a violation of rights is redressed or the enforcement of a right is achieved, often involving legal processes or actions.