One Problem with the Ripple Effect from the Fed's Monetary

question 1

Multiple Choice

One problem with the ripple effect from the Fed's monetary policy is

• A)the fact that the monetary policy transmission process is long and drawn out.
• B)that changing the Federal funds target rate seldom has an effect on the markets for reserves and loanable funds.
• C)that the Fed's policy sometimes has a large impact on potential GDP as well as its usual impact on aggregate demand.
• D)the tight relationship that the Federal funds rate has to aggregate spending.
• E)the frequent misalignment of the spread between the Federal funds rate and the Federal funds rate target.

---

Definitions:

Net Income

The final amount of money a company makes after taking away all expenses, including taxes and the costs of operation, from the total income.

Owner Drawings

Amounts withdrawn by the owner of a business for personal use, reducing the owner's equity in the business.

Revenues

The income earned from normal business operations and includes discounts and deductions for returned merchandise.

Expenses

Expenses refer to the outflow of money to another person or company to pay for an item or service, or for costs necessary to operate a business.