Monetarists Argue That Setting a Specific Target for Money Supply

question 36

Multiple Choice

Monetarists argue that setting a specific target for money supply is the best policy because:

• A) there are no lags in policy making.
• B) the central bank does not make the target publicly available.
• C) changes in interest rates can take up to 18 months to work their way through the
• Economy.
• D) the velocity of money is not predictable.

---

Definitions:

Tax Rates

The percentage at which an individual or corporation is taxed by the government, which can vary based on income level, type of income, and other factors.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of a company.

Marginal Tax Rates

The rate at which the next dollar of taxable income is taxed.

Eligible Dividends

Designated dividends that are entitled to a reduced tax rate in certain jurisdictions, generally paid out of the earnings of a corporation already taxed at the corporate level.