Why Doesn't the Fed Have Both a Money Supply Target

question 210

Multiple Choice

Why doesn't the Fed have both a money supply target and an interest rate target?

• A)Short-term interest rates do not respond to changes in the money supply,which the Fed can control.
• B)The Fed does not control money demand.
• C)The Fed cannot offset the impact of changes in cash management by the public or changes in lending policies of commercial banks on the money supply.
• D)Only the level of interest rates matters when we consider rates of growth in real GDP,employment,and rates of price inflation.

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Definitions:

Direct Labor Costs

The total cost of wages, benefits, and taxes for employees who are directly involved in the production of goods or services.

Cost Of Goods Manufactured

The manufacturing costs associated with units of product that were finished during the period.

Job-Order Costing

An accounting method used to track costs and revenues by specific jobs or orders, commonly used in industries with customized products.

Direct Labor Costs

The wages and benefits paid to workers who are directly involved in the manufacturing of products.