TARGETING INTEREST RATES CAN BE PROCYCLICAL BECAUSE (A) AN INCREAS...

78) - TEST BANK CHAPTER 18 CONDUCT OF MONETARY POLICY GOALS AND TARGETS TÀI CHÍNH TIỀN TỆ
TEST BANK CHAPTER 18 CONDUCT OF MONETARY POLICY GOALS AND TARGETS TÀI CHÍNH TIỀN TỆ
78) Targeting interest rates can be procyclical because (a) an increase in income increases interest rates, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income. (b) an increase in interest rates increases income, causing the Fed to buy bonds, increasing the (c) an increase in the monetary base increases the money supply, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income. (d) an increase in income increases the monetary base and money supply, causing the Fed to buy bonds to increase interest rates and income. (e) none of the above. Answer: A Question Status: New