QUESTION 35

The Federal Reserve has the ability to set all interest rates in the economy including mortgage rates and credit card rates.

True

False

1.96078 points

QUESTION 36

The monetary base is defined as the sum of currency in circulation and reserve balances (deposits held by banks and other depository institutions in their accounts at the Federal Reserve).

True

False

1.96078 points

QUESTION 37

Milton Friedman argued that the money supply provides important information about the near-term course for the economy and determines the level of prices and inflation in the long run.

True

False

1.96078 points

QUESTION 38

The FOMC is intentionally vague about its course for monetary policy. This is done to limit speculation in the stock and bond markets.

True

False

1.96078 points

QUESTION 39

Following its meeting in January 2012, the FOMC issued a statement regarding its longer-run goals and monetary policy strategy. The FOMC noted in its statement that the Committee judges that inflation at the rate of 0% percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's statutory mandate.

True

False

1.96078 points

QUESTION 40

The FOMC communicates its inflation rate goals to help keep longer-term inflation expectations firmly anchored. This fosters price stability and moderate long-term interest rates and enhances the FOMC's ability to promote maximum employment.

True

False