The Operational Goals the Fed Uses for Its Monetary Policy

question 22

Multiple Choice

The operational goals the Fed uses for its monetary policy objectives are the

• A) federal funds rate and the supply of reserves.
• B) the demand for reserves and the supply of reserves.
• C) supply of reserves and the output gap.
• D) the core inflation rate and the output gap.
• E) federal funds rate and the core inflation rate.

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Definitions:

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, often through the acquisition of assets.

Government Spending

Expenditures made by the government for its operations, provision of public services, or to stimulate the economy.

Imports

Products and offerings imported from foreign countries for the purpose of being sold.

Government Purchases

Expenditures made by the government for goods and services including infrastructure, public services, and national defense.