Which Statement Is Correct Regarding the Federal Reserve

question 126

Multiple Choice

Which statement is correct regarding the Federal Reserve?

• A) Most economists believe that the Federal Reserve does more harm than good.
• B) The Federal Reserve has developed the ability to manage the economy with great precision.
• C) Its control of the money supply is not connected to the performance of the economy.
• D) The Federal Reserve's decisions usually have an immediate effect on the economy's unemployment rate.

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Definitions:

Private Benefits

The direct advantages or gains accruing to an individual or organization from their economic actions, excluding wider societal impacts.

Producer Surplus

The difference between the amount that producers are willing to accept for a good or service and the actual amount they receive in the market.

Externality

A cost or benefit from production or consumption that accrues to someone other than the immediate buyers and sellers of the product being produced or consumed (see negative externality and positive externality).

Third Party

An individual or group besides the two primarily involved in a transaction or legal matter, sometimes involved as an intermediary or independent party.