If the Federal Reserve Attempts to Continue Reducing Unemployment by Manipulating

question 5

Multiple Choice

If the Federal Reserve attempts to continue reducing unemployment by manipulating monetary policy,which of the following would you expect to see?

• A)The Fed will follow deflationary monetary policies.
• B)The Fed will follow inflationary monetary policies.
• C)The rate of inflation will fall as Fed tries to reduce the unemployment rate.
• D)The Fed will reduce the natural rate of unemployment.

---

Definitions:

Average Total Assets

The mean value of all assets owned by a company over a specific period, used in financial analysis to gauge the company's asset use efficiency.

Profitability Index

A calculation used to determine the relative profitability of a project by dividing the present value of future expected cash flows by the initial investment.

Present Value

The current worth of a future sum of money or cash flows, given a specified rate of return.

Internal Rate Of Return

The percentage rate that equalizes the net present value of a project's cash flows to zero.