"Monetary Policy Can Be Described Either in Terms of the Money

question 61

Multiple Choice

"Monetary policy can be described either in terms of the money supply or in terms of the interest rate." This statement amounts to the assertion that

• A)rightward shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate.
• B)the activities of the Federal Reserve's bond traders are irrelevant if the Federal Reserve decides to target an interest rate.
• C)changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as increasing the interest rate.
• D)our analysis of monetary policy is not fundamentally altered if the Federal Reserve decides to target an interest rate.

---

Definitions:

Equity Investments-AFS

Acronym for Available-for-Sale, equity investments are securities not classified as held-for-trading or held-to-maturity, and can be sold in response to liquidity needs.

Equity Method

An accounting technique used to record investments in other companies where the investor has significant influence but does not have full control.

Fair Value Method

The fair value method is an accounting approach that measures assets and liabilities at estimates of their current market value rather than historical cost.

Historical Cost Method

An accounting technique that values an asset at its original purchase price, without adjustments for inflation or market value changes.