Targeting Interest Rates Can Be Procyclical Because

question 49

Multiple Choice

Targeting interest rates can be procyclical because

• A)an increase in income increases interest rates,causing the Fed to buy bonds,increasing the monetary base and money supply,leading to further increases in income.
• B)an increase in interest rates increases income,causing the Fed to buy bonds,increasing the monetary base and money supply,leading to further increases in income.
• C)an increase in the monetary base increases the money supply,causing the Fed to buy bonds,increasing the monetary base and money supply,leading to further increases in income.
• D)an increase in income increases the monetary base and money supply,causing the Fed to buy bonds to increase interest rates and income.

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Definitions:

Sociological Imagination

The ability to see the relationship between individual experiences and the larger society, as coined by C. Wright Mills.

Social Forces

The external social structures, institutions, and cultural norms that influence individuals' behavior, choices, and interactions within society.

Sociological Imagination

The ability to see the connection between personal experiences and larger social forces.

Cultural Practices

The habitual activities and norms that define a culture, including religious rituals, marriage ceremonies, and dietary habits.