The Information Lag Facing the Fed Is

question 20

Multiple Choice

The information lag facing the Fed is

• A)the difficulty of becoming informed quickly of changes in public opinion about which policy goal is most important.
• B)the delay in receiving accurate information about the state of the economy.
• C)the delay in Congress and the President communicating their policy goals for the Fed to act on.
• D)the time required for monetary policy changes to affect output, employment, and prices.

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Tax Rate

The rate at which taxes are applied to a person or company's income.

WACC

The Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Cost of Capital

The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile.