Monetary Policy

question 187

Multiple Choice

Monetary policy

• A)must be described in terms of interest-rate targets.
• B)must be described in terms of money-supply targets.
• C)can be described either in terms of the money supply or in terms of the interest rate.
• D)cannot be accurately described in terms of the interest rate or in terms of the money supply.

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Definitions:

Implicit Rate

The implied rate of return that is not explicitly stated, often used in the context of comparing the cost of borrowing to the rate of return on investments.

Equity Capital

The amount of money that is invested in a company by its owners, in exchange for ownership interest or shares.

Economic Profit

The surplus remaining after deducting total costs from total revenues, including both explicit and implicit costs, and representing a measure of economic efficiency.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.