Using the Money Supply as the Exclusive Intermediate Target for Policy

question 27

Multiple Choice

Using the money supply as the exclusive intermediate target for policy purposes has fallen out of favor for all but which of the following reasons?

• A) the velocity of money is unpredictable
• B) the various monetary aggregates often send conflicting signals
• C) the decision lag for setting money supply targets is too long
• D) there is no reliable formula relating changes in interest rates to changes in the money supply
• E) raising interest rates may reduce GDP rather than reducing inflation

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Definitions:

Psychographic Variables

Characteristics of consumers or markets based on interests, lifestyles, attitudes, and values for segmentation purposes.

Segmentation Bases

Criteria or variables used for dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors, who might require separate products or marketing mixes.

Psychographic Segmentation

A marketing technique that divides consumers into sub-groups based on shared psychological characteristics, values, attitudes, interests, or lifestyles.

Subjective Mental Attributes

Personal, individual characteristics or perceptions that are influenced by one's own mind and experiences.