Distinguish between monetary policy instruments and goals
What will be an ideal response?
Monetary policy instruments are the variables the Fed can use to conduct monetary policy and reach its goals. These include the monetary base or the federal funds rate. Monetary policy goals are the ultimate objectives for the Fed. These include price stability and full employment.
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Potential real GDP in an economy is
a. the level of production that occurs if there's no cyclical unemployment. b. the amount an economy can produce if every man, woman, and child is employed. c. the level of production that occurs if all unemployment is cyclical and structural. d. the level of production that occurs if the unemployment rate is zero.
The total demand for money curve will shift to the right as a result of:
A. an increase in nominal GDP. B. an increase in the interest rate. C. a decline in the interest rate. D. a decline in nominal GDP.
In the United States saving is allocated to its most productive use by:
A. the federal, state, and local governments. B. the Federal Reserve. C. a decentralized, market-oriented financial system. D. regulations and laws designed to improve productivity.
If real GDP is greater than nominal GDP then the GDP price index
A) is greater than 100. B) is less than 100. C) is equal to 100. D) is either equal to or greater than 100. E) None of the above answers is correct because we need to choose a new base year.