The Federal Reserve's Policy to "Lean Against the Wind" Means

question 44

Multiple Choice

The Federal Reserve's policy to "lean against the wind" means that

• A) when output is high, the Fed sets a high interest rate.
• B) when price levels are high, the Fed sets a low interest rate.
• C) when output is low, the Fed sets a high interest rate.
• D) when price levels are low, the Fed sets a high interest rate.

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Definitions:

Net Capital Loss

The result when the total capital losses from investments exceed the total capital gains in a tax year.

Net Capital Gain

The profit from the sale of an asset or investment, subtracted by any losses from sales in the same tax year.

AMT

Short for Alternative Minimum Tax, a parallel tax system designed to ensure that individuals and corporations pay at least a minimum amount of tax.

AMT Income

Income calculated for the Alternative Minimum Tax, which includes certain adjustments and preferences to regular taxable income.