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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If people cannot distinguish between goods A and B, then economists describe the goods as
a. having a zero cross elasticity b. being perfect substitutes c. belonging to an oligopolistic industry d. belonging in different markets e. having a cross elasticity of one
Which of the following statements concerning the distinction between positive and normative economics is TRUE?
A. Positive statements are concerned with what is while normative statements are concerned with what will be. B. Positive statements are concerned with what is, while normative statements are concerned with what someone thinks should be. C. Positive statements are true while normative statements are false. D. Positive statements are concerned with what people think, while normative statements are concerned with what people do.