Why does the Fed have to be concerned with money growth even though their main focus seems to be on interest rates?

What will be an ideal response?


The Fed needs to focus on money growth because economic research and the resulting evidence point to the fact that there is strong correlation between the rate of inflation and the rate of money growth. As a result, in order to avoid sustained episodes of high inflation, the Fed must be concerned with money growth.

Economics

You might also like to view...

A good has a downward-sloping demand curve and a perfectly elastic supply. Imposing a sales tax of $1 per unit on the sellers of the good

A) raises the price paid by demanders by more than $1.00. B) raises the price paid by demanders by $1.00. C) raises the price paid by demanders by less than $1.00. D) does not change the price paid by demanders.

Economics

Answer the following statements true (T) or false (F)

1. The highest unemployment rate in the United States in recent years has been among adult females. 2. Part-time workers who want full-time employment but cannot find it are considered underemployed. 3. Increases in the federal minimum wage directly affects only a small percentage of U.S. workers. 4. Because of increases in the minimum wage, new entrants into the labor force find it easier to find employment. 5. Many economists believe that increases in the minimum wage tend to create a labor surplus.

Economics

The legislation that extended antitrust legislation to proprietorships and partnerships was the:

A. Sherman Act. B. Hart-Scott-Rodino Act. C. Robinson-Patman Act. D. Celler-Kefauver Act.

Economics

As Betsy's consumption of coffee increases, her marginal utility from coffee

A) increases. B) decreases. C) remains unchanged. D) increases first and then decreases.

Economics