Which of the Following Statements Is Correct with Respect to Monetary

question 46

Multiple Choice

Which of the following statements is correct with respect to monetary policy?

• A) Targeting the money supply is likely to be more successful when the demand for money is volatile.
• B) When the velocity of money is stable, targeting the money supply is likely to be completely ineffective.
• C) Interest rates will always be stable if the central bank keeps the growth in the money supply stable.
• D) Australia's very high rates of inflation in the early 1970s lead to the monetary targeting in terms of the growth of the monetary aggregate, M3.

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Definitions:

Revaluation

The process of adjusting the book value of a fixed asset or security to reflect its current market value.

Fair Value

The estimated price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Business Combination

A transaction or event through which a company acquires control over one or more businesses.