Current Federal Reserve Policy Focuses on Interest Rates,rather Than on Monetary

question 43

Multiple Choice

Current Federal Reserve policy focuses on interest rates,rather than on monetary aggregates,because ________.

• A)monetary aggregates do not provide clear or consistent signals to guide policymakers
• B)open market operations affect interest rates more directly than they affect monetary aggregates
• C)according to the Fisher effect,the interest rate is a key determinant of the inflation rate
• D)all of the above
• E)none of the above

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Definitions:

Heckscher-Ohlin Model

An economic theory that proposes countries export what they can most efficiently and abundantly produce.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than its competitors.

Ricardian Model

An economic theory that focuses on comparative advantage, explaining how countries can gain from trade by specializing in producing goods at a lower opportunity cost.

Production Possibility Frontiers

These are curves that depict the maximum potential output of a combination of two goods or services that an economy can produce with available resources.