If the Fed Had to Choose Between Fixing the Interest

question 45

Multiple Choice

If the Fed had to choose between fixing the interest rate and fixing the supply of money,it would

• A)always fix the money supply,so that the price level would be stable
• B)always fix the money supply,so that spending would be stable
• C)always fix the interest rate,so that investment would be stable
• D)always fix the interest rate,so that demand for money would be stable
• E)find neither alternative would be clearly better than the other

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Definitions:

Operating Profit Test

A financial metric used to assess a company's profitability from its core operations, excluding effects of financing and taxes.

Operating Segment

A component of an enterprise that engages in business activities from which it may earn revenues and incur expenses.

Separate Disclosures

Financial reporting requirement for specific information to be provided separately in financial statements to enhance clarity and understanding.

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses, taxes, and costs associated with sustaining the activity.