What Actions Could the Federal Reserve Take to Achieve Consistent

question 140

Multiple Choice

What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?

• A)The Fed could increase the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
• B)The Fed could maintain a growth rate of the money supply of 4 percent,regardless of whether inflation was rising or falling in the economy.
• C)The Fed could follow contractionary monetary policy that would reduce the federal funds rate to zero so investment will rise consistently.
• D)The Fed has no direct control over real GDP in the long run,so there are no actions it could take to achieve that goal.

Learn about the psychological impacts of environmental and social traps.

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Identify the most effective approaches for encouraging water and energy conservation.

Understand the calculation and application of the effective-interest method of amortization for bond discount.

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Definitions:

Severe Depression

A form of depression that is intense in severity, potentially impairing the ability to function in daily life.

Electroconvulsive Therapy

A mental health therapy where seizures are deliberately caused using electrical currents to alleviate symptoms of psychiatric conditions.

Psychoactive Drugs

Chemical substances that alter thinking, perception, and memory.

Medically Based Therapy

Treatments or interventions that are grounded in or founded on established medical science or practices.