In the 1970s,the Fed Selected an Interest Rate as an Operating

question 57

Multiple Choice

In the 1970s,the Fed selected an interest rate as an operating target rather than a reserve aggregate primarily because it

• A)had no interest in targeting a monetary aggregate,as evidenced by its unwillingness to target a reserve aggregate.
• B)was still very concerned with achieving interest rate stability.
• C)was committed to targeting free reserves.
• D)was committed to the real bills doctrine.

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Definitions:

Third Worker

In the context of labor and production, refers to the addition of a third employee in a process, which can affect productivity differently depending on the scenario.

Marginal Product

Additional output gained by employing one more unit of production.

Second Worker

The term "second worker" can refer to an additional employee hired to perform tasks, often implying the expansion of workforce due to increased workload.

Law of Diminishing Marginal Returns

A principle stating that adding an additional factor of production results in smaller increases in output after a certain point, holding other inputs constant.