If the Fed chooses to target the money supply, it
a. cannot at the same time control the interest rate
b. can only do so if the interest rate is targeted as well
c. gives up the opportunity of determining the legal reserve requirement
d. gives up the opportunity of determining the discount rate
e. gives up the opportunity of determining the federal funds rate
A
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Personal income and personal disposable income refer to payments ultimately flowing to
A) governments. B) households. C) foreigners. D) firms.
Which of the following is an activity of government that is not an activity of private firms?
A. Enforcing involuntary transactions. B. Paying equitable wages. C. Creating positive externalities. D. Pursuing economic efficiency.
One of the results of the strong economic growth in the United States relative to the rest of the world is a
a. U.S. trade surplus. b. U.S. trade deficit. c. growing U.S. net exports. d. trade deficit for U.S. trading partners.
The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?
a. Selling government securities and raising the discount rate b. Selling government securities and lowering the discount rate c. Buying government securities and lowering the discount rate d. Buying government securities and raising the reserve ratio