Give an example of a monetary policy target. Explain why the Fed uses policy targets
What will be an ideal response?
One possible monetary target is the money supply. Another possible target is the interest rate. (Either answer is correct). A monetary policy target is an economic variable that the Fed can affect directly. The Fed uses monetary targets because it cannot directly manipulate and change monetary policy goals such as high employment, economic growth, and price stability. The Fed can affect the targets directly and they in turn affect the variables such as real GDP and the price level, which are closely related to the Fed's policy goals.
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Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar
If the price of a Chinese sweater was 120 yuan in both years, the new dollar price in 2011 would be ________ and imports of Chinese sweaters would ________. A) $30; increase B) $40; increase C) $40; decrease D) $30; decrease E) $40; stay the same because the price stayed the same at 120 yuan
Urban traffic moves as effectively as it does because
A) all drivers have the same attitudes regarding courtesy, safety, and speed. B) drivers are usually concentrating intently on their own narrow goals. C) insurance does not cover all the costs of an accident. D) drivers take other drivers' specific goals and interests into account. E) police are able to enforce the city's traffic plan.
In the above figure, if the real interest rate is 8, there is
A) underproduction in this economy. B) a surplus of loanable funds. C) a shortage of loanable funds. D) a shortage in available funds for investment.
If a firm wants to determine total cost, it needs
A. to add its variable costs to its fixed costs. B. the prices of inputs and of output. C. the variable cost per unit. D. the production function and the price of its output.