Article Summary Concerned About Low Inflation,Federal Reserve Bank of Minneapolis President Narayana

question 123

Multiple Choice

Article Summary
Concerned about low inflation,Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Fed needed a more aggressive stimulus policy than the setting of near-zero interest rates,and added that negative interest rates could be an effective policy tool.In a September 2015 interview,Kocherlakota stated "Given the inflation outlook,given how low inflation is expected to be,to ensure the credibility of our inflation target,taking a more accommodative stance in September would have been totally justified." While the Federal Open Market Committee chose to hold rates near zero in their September 2015 meeting,Fed Chair Janet Yellen announced that a rate increase would be warranted by the end of the year,and that "negative interest rates was not something that we considered very seriously at all today."
-Refer to the Article Summary.Implementing a negative interest rate policy,as was advocated by the president of the Federal Reserve Bank of Minneapolis,would be designed to ________ the price level and ________ real GDP.

• A)decrease;decrease
• B)decrease;increase
• C)increase;decrease
• D)increase;increase

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Definitions:

Debt-Equity Ratio

The ratio showing the blend of debt and equity financing in a company’s strategy for asset accumulation.

Common-Base Year Value

A financial analysis technique in which all figures are expressed in relation to a certain base year, allowing for comparison over time by setting a common reference point.

Accounts Receivable

Receivable sums by a business from its patrons for items or services delivered without formal settlement.

Debt-Equity Ratio

A proportionality indicator for assessing how company assets are funded through debt and equity.