Which of the following is a reason that the Fed does not traditionally attempt to limit asset price bubbles?
A. The Fed’s policies cannot be targeted at only one sector of the economy.
B. Price changes for one asset or one industry cannot have a substantial impact on the entire economy.
C. The FDIC rather than the Fed is responsible for recognizing bad lending practices.
D. All of these responses are correct.
Answer: A
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To determine the marginal social cost (MSC) of abatement, we find the sum of
a. MPC + MAC b. ?MAC + MCE c. MAC + ?MCE d. MAC + ?MEC
Which of the following is most sensitive to fluctuations in GDP?
a. government purchases b. government nonmilitary spending c. transfer payments d. military spending e. interest on the national debt
The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly
a. quantity is lower than the socially-optimal quantity. b. price equals marginal revenue. c. price is the same as average revenue. d. earns positive profits.
One reason that the aggregate demand curve slopes downward is because
A. higher price levels increase real wealth and consumption. B. higher price levels increase investment. C. higher price levels reduce net exports. D. higher price levels reduce interest rates.