If the Fed Wants to Lower the Nominal Interest Rate

question 261

Multiple Choice

If the Fed wants to lower the nominal interest rate in the short run, the Fed ________ the growth rate of the quantity of money.

• A) raises
• B) lowers
• C) does not change
• D) first lowers and then raises
• E) None of the above answers are correct because the premise of the question is wrong since the Fed cannot affect the nominal interest rate, only the real interest rate.

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Definitions:

Distributed Term

In logic, a term in a categorical proposition that applies to all members of the category it refers to.

Validity Rules

Guidelines and principles used in logic to determine whether arguments are valid, ensuring that the conclusion necessarily follows from the premises.

Validity Rules

Guidelines or principles used to determine whether an argument or reasoning process is logically sound and its conclusions are based on true premises.

Existential Import

The implication that a statement makes about the existence of the subjects it mentions.