"Monetary Policy Can Be Described Either in Terms of the Money

question 61

Multiple Choice

"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that

• A)rightward shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate.
• B)the activities of the Federal Reserve's bond traders are irrelevant if the Federal Reserve decides to target an interest rate.
• C)changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as increasing the interest rate.
• D)our analysis of monetary policy is not fundamentally altered if the Federal Reserve decides to target an interest rate.

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Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows or the rate charged by central banks to banks for loans.

Medicare Tax Rate

The Medicare Tax Rate is a federal payroll tax rate used to fund the Medicare program, charged to both employees and employers.

Social Security Tax

A payroll tax that finances the United States' social security program, providing benefits for retirees, the disabled, and children of deceased workers.

Hourly Wage Rate

The amount of money paid for each hour of work performed, typically associated with part-time or contractual employment.