If the Fed chooses to target the money supply, it
a. cannot at the same time control the interest rate
b. can only do so if the interest rate is targeted as well
c. gives up the opportunity of determining the legal reserve requirement
d. gives up the opportunity of determining the discount rate
e. gives up the opportunity of determining the federal funds rate
A
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The quantity of loanable funds demanded increases if the real interest rate falls, all other things remaining the same, because the real interest rate
A) is the opportunity cost of investment. B) is not related to the price of bonds and stocks. C) affects the supply of saving which, in turn, determines the quantity of investment. D) affects the quantity of saving supplied. E) determines the cost of living.
"He who pays a tax should receive the benefit from the expenditure financed by the tax." This statement reflects which of the following principles for a tax?
a. Fairness of contribution. b. Ability-to-pay. c. Benefits-received. d. Inexperience-to-collect.