Which of the following variables is likely to serve as an intermediate target for monetary policy?

When the Fed lowers the federal funds rate, which of the following economic variables responds most rapidly?

A) other short-term interest rates B) consumption expenditure C) the supply of loanable funds D) the long-term real interest rate E) the inflation rate

Assume that policy makers are pursuing a fixed exchange rate regime and that the economy is initially operating at the natural level of output. Which of the following will occur as a result of a revaluation?

A) The real exchange rate will be permanently higher in the medium run. B) The real exchange rate will be permanently lower in the medium run. C) The effects of this revaluation on the real exchange rate will be ambiguous in the medium run. D) The real exchange rate will be unchanged in medium run. E) The nominal exchange will initially fall in the short run and then increase in the medium run.