After the Year 2000, the FOMC Changed Some of Its

question 24

Multiple Choice

After the year 2000, the FOMC changed some of its operating procedures.In particular, it stopped setting:

• A)explicit interest rates for commercial banks to charge.
• B)explicit ranges for money growth targets.
• C)explicit number of government bonds to be bought and sold.
• D)standardized real GDP targets.
• E)explicit numbers for the targeted natural rates of unemployment.

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Definitions:

Systematic Risk

The risk inherent to the entire market or market segment, which cannot be mitigated through diversification.

Security Market Line

A representation in financial markets of the relationship between risk and expected return, used in the Capital Asset Pricing Model.

Overpriced Security

A security trading at a price believed to be higher than its theoretical value or intrinsic worth.

Expected Market Rate

The anticipated rate of return on an investment as predicted by investors based on historical market data and trends.