Targeting Interest Rates and Targeting the Money Supply Are Equivalent

question 13

Multiple Choice

Targeting interest rates and targeting the money supply are equivalent if

• A) money demand is stable
• B) banks hold no excess reserves
• C) exchange rates are fixed
• D) central banks practice inflation targeting
• E) consumers exhibit rational expectations

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Definitions:

Statement of Cash Flows

A financial statement that details the inflows and outflows of cash within a company during a specific period.

Cash Receipts

The collection of money (cash, checks, electronic transfers) by a business from its customers, either for goods sold or services provided.

Cash Flows

Cash flows refer to the net amount of cash and cash-equivalents being transferred into and out of a business.

Cash Uses

Refers to how cash is spent or utilized by an individual or organization, including operating expenses, investment activities, and financing activities.