Conducting Monetary Policy So That the FF Rate = 0

question 93

Multiple Choice

Conducting monetary policy so that the FF rate = 0.05, where the FF rate is the nominal federal funds interest rate, is an example of :

• A) an active policy rule.
• B) a passive policy rule.
• C) discretionary policy.
• D) an automatic stabilizer.

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Definitions:

Expenses

The costs incurred in the process of generating revenue, including costs like rent, utilities, payroll, and materials.

Assets

Resources owned by a company from which future economic benefits are expected to flow to the entity, including cash, inventory, and property.

Liabilities

Financial obligations or debts that a business owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Expense Recognition Principle

The accounting principle that dictates expenses should be recognized in the period in which they are incurred, contributing to the accurate reporting of financial results.