A 1977 Amendment to the Federal Reserve Act of 1913

question 3

Multiple Choice

A 1977 amendment to the Federal Reserve Act of 1913

• A)says the Federal Reserve should only promote maximum employment
• B)says the Federal Reserve should only promote price stability
• C)says the Federal Reserve should promote price stability and maximum employment,but does not specify how the Federal Reserve should weight these goals.
• D)says the Federal Reserve should promote price stability and maximum employment,but specifies that it place more weight on promoting price stability.

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Definitions:

Money Supply Growth Rate

The rate at which the amount of money available in an economy increases over a specific period.

Short-run Economy

The period in which the quantities of at least one input, such as capital, is fixed and firms adjust only labor inputs to change output levels.

Money Supply Growth Rate

The speed at which available monetary resources in an economy grow over a determined time frame.

Short-run Phillips Curve

A graphical representation indicating an inverse relationship between the rate of inflation and the rate of unemployment in the short term.