The Federal Reserve does not target both the money supply and an interest rate because
A) it would be too confusing to Wall Street and would disrupt the financial markets.
B) it would be too easy for Wall Street to determine what policy the Fed is following and this would destabilize the economy.
C) it would be illegal according to the Federal Reserve Act.
D) the Fed cannot achieve a target for both the money supply and an interest rate at the same time.
Answer: D
You might also like to view...
If the Fed buys a T-bill from an individual rather than from a bank, the effect on the money supply is
A. smaller because there is no multiplier process. B. larger because of the multiplier process. C. the same. D. impossible to predict without knowing the value of the multiplier.
The opportunity cost of money is
A) zero. B) the inflation rate. C) the real interest rate. D) the nominal interest rate.
If a country is exporting a good, this is because the country has an absolute advantage in the production of that good
a. True b. False Indicate whether the statement is true or false
The substitution effect causes a consumer to buy less of a product when the price increases because the
A. product is now less expensive compared to similar products B. product is now more expensive compared to similar products C. consumer's real income has decreased D. Consumer's real income has increased E.. consumer will buy more inferior goods and fewer normal goods