Which Statement Is True

question 233

Multiple Choice

Which statement is true?

• A)Open market operations are carried out by the President and Congress.
• B)The rate of growth of our money supply is set by law.
• C)The most powerful policy weapon of the Federal Reserve is raising and lowering the discount rate.
• D)The President's appointment of the chairman of the Federal Reserve must be approved by Congress.

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Definitions:

System 1

A term from psychology, referring to the fast, automatic, and often subconscious way of thinking, as opposed to the slower, more deliberate thought processes of System 2.

System 2

A term often used in behavioral economics, referring to slow, deliberative, and analytical thinking, contrasted with fast, instinctive, and emotional 'System 1' thinking.

Neoclassical Assumption

Underlying principles of neoclassical economics that include rationality, individuals maximizing utility, firms maximizing profits, and markets tending toward equilibrium.

Rational Behavior

Human behavior based on comparison of marginal costs and marginal benefits; behavior designed to maximize total utility. See rational.