Suppose the Fed's primary goal is price stability and it aims to keep the inflation rate at 2%. If the inflation rate rose above 2%, what should it do?
A) pursue an expansionary monetary policy
B) pursue a contractionary monetary policy
C) reduce the required reserve ratio
D) impose a temporary ceiling on the federal funds rate
Ans: B) pursue a contractionary monetary policy
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Refer to the Article Summary. When does the Treasury Department borrow? Why would the Treasury have to borrow more than it estimated, as was indicated by its letter to Congress to raise the debt ceiling? When would the Treasury repay what it borrowed
, and who is it repaying?
According to Edward Denison, the major source of labor productivity is
a. improvements in labor quality. b. economies of scale. c. the changing composition of the labor force. d. technological progress. e. education per worker.
The institution ultimately responsible for managing the nation's money supply and coordinating the banking system to ensure a sound economy is called a:
A. peoples' bank. B. central bank. C. national bank. D. public banking system.
Dino spends his income on two goods, cigars and peppermints. He considers both goods to be normal goods. If Dino's income decreases and the prices of the two goods remain constant, he will purchase:
A. more cigars and fewer peppermints. B. more cigars and more peppermints. C. fewer cigars and more peppermints. D. fewer cigars and fewer peppermints.