Author Question: What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent ... (Read 64 times)

schs14 · **on:** Jun 29, 2018

What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?

A) The Fed could follow contractionary monetary policy that would reduce the federal funds rate to zero so investment will rise consistently.
B) The Fed could maintain a growth rate of the money supply of 4 percent, regardless of whether inflation was rising or falling in the economy.
C) The Fed has no direct control over real GDP in the long run, so there are no actions it could take to achieve that goal.
D) The Fed could increase the growth rate of the money supply by 1 each year until the inflation rate was exactly equal to 4 percent.

Question 2

Why might certain industries have a long run and a short run that is not separated by very much time?

What will be an ideal response?

blazinlyss · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

It may be that entry and exit can occur with relative ease if setting up the businessand leaving it do not require much time.