List and briefly explain the primary goals of the Fed
What will be an ideal response?
1. Price stability. The Fed's goal of price stability means that it attempts to achieve low and steady inflation. Although the Fed has never formally announced a target for the inflation rate, many economists believe that the Fed considers an inflation rate of roughly 2% to be consistent with price stability.
2. High employment. The Fed attempts to keep cyclical unemployment as close to zero as possible to be compatible with its goal of price stability.
3. Financial market stability. Financial market stability makes possible the efficient matching of savers and borrowers and promotes the efficient use of resources.
4. Interest rate stability. Stabilizing interest rates makes it easier for firms to plan investments in plant and equipment and for households to have confidence in long-term investments in houses, and it can help to stabilize the financial system.
You might also like to view...
In the used car market, adverse selection can be limited by
A) offering warranties. B) establishing loan limits. C) requiring high deductibles. D) requiring low deductibles.
For a monopsonistic hirer of labor the gap between labor's marginal value product and its wage rate will be greater
a. the more elastic the supply curve for labor. b. the more inelastic the supply curve for labor. c. the more elastic the firm's demand for labor. d. the more inelastic the firm's demand for labor.
An increase in the wage rate will lead to a reduction in the quantity of labor supplied if
a. the substitution effect outweighs the income effect b. the income effect outweighs the substitution effect c. the opportunity costs of leisure do not increase d. the opportunity costs of working always increase e. workers are irrational because otherwise they would be violating the law of supply
In general in the U.S., persons classified as poor have money income that amounts to
A. less than half the median income. B. three quarters of the median income. C. the median income. D. half the median income.