Some Economists Argue That the Fed Should Commit to Keeping $\vec{ M }$

question 113

Multiple Choice

Some economists argue that the Fed should commit to keeping $\vec{ M }$ + $\vec { v }$ fixed at a particular value,say 5%.How would this rule require the Fed to respond in the event of a negative spending shock? A negative real shock?

• A) increase
• \(\vec{ M }\) ;do nothing
• B) increase
• \(\vec { M }\) ;increase
• \(\vec{ M }\)
• C) increase
• \(\vec{ M }\) ;decrease
• \(\vec{ M }\)
• D) decrease
• \(\vec{ M }\) ;increase
• \(\vec{ M }\)

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Definitions:

Actual Hours

The real number of hours worked or spent on a specific task or project, as opposed to planned or estimated hours.

Direct Labour Rate Variance

The difference between the actual wages paid to workers and the standard cost of those wages for the actual hours worked.

Labour Efficiency Variance

A metric used to measure the difference between the actual hours worked and the standard hours expected to complete a task.

Standard Rate (SR)

Standard Rate (SR) refers to a predefined or established cost or value used in financial and operational calculations, often applied in budgeting and cost accounting.