If the Fed Pursues a Strategy of Targeting an Interest

question 108

Multiple Choice

If the Fed pursues a strategy of targeting an interest rate when fluctuations in money demand are prevalent

• A)fluctuations of nonborrowed reserves will be small.
• B)fluctuations of nonborrowed reserves will be large.
• C)the Fed will probably quickly abandon this policy,as it did in the 1960s.
• D)the Fed will probably quickly abandon this policy,as it did in the 1950s.

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Definitions:

Tone

In literature and communication, tone refers to the attitude or emotional nuance conveyed by the writer or speaker.

Chunking

A process by which individual pieces of information are bound together into a meaningful whole, often used as a memory aid.

Short-term Memory

A memory system that temporarily retains information for a brief period, usually up to 30 seconds, before it is stored permanently or forgotten.

Capacity

The ability or power to do, experience, or understand something, often used in the context of mental or physical capabilities.