The relative quickness with which the Open Market Committee can respond to changes in economic indicators leads the Fed to
A) control precisely the growth rate of the money stock.
B) control precisely the growth rate of total spending.
C) make more frequent mistakes in monetary policy than Congress makes in executing fiscal policy.
D) use the discount rate to control bank lending and hence aggregate demand.
C
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In 1940, civilian purchases of goods and services equaled roughly _____ of GDP; by 1943, it had changed to roughly ________ of GDP
a. 97 percent; 57 percent b. 50 percent; 50 percent c. 25 percent; 75 percent d. 50 percent; 10 percent
Assume that taxes are constant. If the government borrows $17 billion in new funds and has a budget deficit of $35 billion, then the central bank has to:
a. reduce the money supply by $52 billion. b. reduce the money supply by $35 billion. c. increase the money supply by $17 billion. d. increase the money supply by $35 billion. e. increase the money supply by $18 billion.