FNAN 320 test 2
Sharon deposits $150 in her savings account. At the end of one year, she has $156.38. What was the interest rate that Sharon earned? a. 4.25% b. 6.38% c. 4.52% d. 5.63%
a. 4.25%
Suppose a family wants to save $60,000 for a child's tuition. The child will be attending college in 18 years. For simplicity, assume the family is saving a one-time college tuition payment. If the interest rate is 6%, then about how much does this family need to deposit in the bank today? a. $10,000 b. $21,000 c. $42,000 d. $57,000
b. $21,000
If the annual interest rate is 5%, the price of a six-month Treasury bill would be a. $97.50 b. $97.59 c. $95.25 d. $95
b. $97.59
If a lender wants to earn a real interest rate of 3% and expects inflation to be 3%, they should charge a nominal interest rate that equals a. 0% b. 6% c. 7% d. 9%
b. 6%
Which of the following is (are) not a permanent voting member on the FOMC? a. The seven Governors of the Fed b. The Secretary of the Treasury c. The President of the Federal Reserve Bank of New York d. The Chair of the Board of Governors
b. The Secretary of the Treasury
If an investment offered an expected payoff of $100 with $0 variance, you would know that a. Half of the time the payoff is $100, and the other half it is $0 b. The payoff is always $100 c. Half of the time the payoff is $200 and the other half it is $0 d. Half of the time the payoff is $200 and the other half is $50
b. The payoff is always $100
Central banks often find that a. They can efficiently pursue all of their goals simultaneously b. There are tradeoffs that make pursuing all of their goals simultaneously impossible c. the goals they pursue will be determined by stock market indicators and executives of large corporations d. they must keep their goals secret or else they cannot be attained
b. There are tradeoffs that make pursuing all of their goals simultaneously impossible
What is the present value of $100 promised in one year from now at 10% annual interest rate? a. $89.50 b. $90 c. $90.91 d. $91.25
c. $90.91
If the annual interest rate is 5%, the price of a one-year Treasury bill per $100 of face value would be a. $95 b. $97.50 c. $95.24 d. $96.10
c. $95.24
If a lender charges a nominal interest rate of 6% and expects inflation to be 3%, they expect to earn a real interest rate of a. 0% b. 2% c. 3% d. 9%
c. 3%
Setting an explicit numerical inflation target is most associated with the goal(s) of a. Transparency b. Accountability c. Both transparency and accountability d. Neither transparency nor accountability; it is about moral hazard
c. Both transparency and accountability
Central banks have the ability to create money, which means that it a. Can control the availability of credit, but not availability of money b. Can make loans only when others can c. Can impact the rate of inflation d. Has an objective to maximize its profit
c. Can impact the rate of inflation
Limited liability means that a stockholder of a corporation a. Is liable for the corporation's liabilities, but nothing more b. Cannot receive dividends that exceed his/her investment c. Cannot lose more than their investment d. Is only responsible for any taxes that the corporation may owe but not its other debts
c. Cannot lose more than their investment
Compared to an independent central bank, elected officials are likely to a. Favor long-run stability over short-term prosperity b. Sacrifice short-term growth to keep future inflation low c. Choose monetary policies that are overly accommodative d. Prefer interest rates to vary more often
c. Choose monetary policies that are overly accommodative
The primary purpose of meetings of the FOMC is to a. Set the required reserve rate b. Set the discount rate c. Decide on how to influence financial conditions d. Set the prime rate
c. Decide on how to influence financial conditions
A promise of a $100 payment to be received one year from today is a. More valuable than receiving the payment today b. Less valuable than receiving the payment two years from now c. Equally valuable as a payment received today if the interest rate is zero d. Not enough information is provided to answer this
c. Equally valuable as a payment received today if the interest rate is zero
Monetary policy in the United States is under the control of the a. US Treasury b. President c. Federal Reserve d. US Senate
c. Federal Reserve
A mortgage, where monthly payments are the same for the duration of the loan, is an example of a(n): a. Variable payment loan b. Insurance loan c. Fixed payment loan d. Equity security
c. Fixed payment loan
The Fed's revenue comes a. From Congress b. From the Department of Commerce c. From internally generated funds from interest on securities it holds and fees charged to banks for payments system services d. Solely from taxes placed on member banks
c. From internally generated funds from interest on securities it holds and fees charged to banks for payments system services
The specific goals of central banks include each of the following except which one? a. High and stable real growth b. Low and stable inflation c. High levels of exports d. Low and stable unemployment
c. High levels of exports
The lower in the interest rate, the a. Lower the present value b. Greater must be n c. Higher the present value d. Higher the future value
c. Higher the present value
Unexpected inflation can benefit some people/firms, but harm others. This is an example of: a. Systematic risk b. Unmeasured risk c. Idiosyncratic risk d. Zero risk since the effects balance
c. Idiosyncratic risk
What links the present to the future in financial markets? a. Risk b. Information c. Interest rates d. Stability
c. Interest rates
The relationship between the price and the interest rate of a zero-coupon bond is best described as a. Volatile b. Fluctuating c. Inverse d. Non-existent
c. Inverse
1. The future value of $200 that is left in account earning 6.5% interest for three years is best expressed by which of the following? a. $200(1.065)*3 b. $200(1.065)/3 c. $200(1.065+3) d. $200(1.065)^3
d. $200(1.065)^3
Suppose that Southwest Airlines has a return of 5% twenty percent of the time and 0% return the rest of the time. The expected return is a. 10% b. 0.1% c. 0.2% d. 1%
d. 1%
A saver knows that if she put $95 in the bank today she will receive $100 from the bank one year from now, including the interest she will earn. What is the interest rate she is earning? a. 5% b. 6% c. 5.52% d. 5.26%
d. 5.26%
During the Great Recession, Federal Reserve forecasts suggested that ____. These forecasts were _____. a. the economy would rebound pretty quickly; correct b. The economy would not rebound for almost a full decade; correct c. The economy would not rebound for almost a full decade; wrong d. the economy would rebound pretty quickly; wrong
d. the economy would rebound pretty quickly; wrong
Stock prices are high when: a. Current dividends are high b. The risk-free rate is low c. The risk premium on equity is low d. Dividends are expected to grow quickly e. All of the above
e. All of the above
The future value of $100 at a 5% per year interest rate at the end of one year is a. $95 b. $105 c. $97.50 d. $107.50
b. $105
If the quantity of bonds demanded exceeds the quantity of bonds supplied, bond prices a. Would rise and yields would fall b. Would fall and yields would increase c. Will rise and yields will remain constant d. Will rise and yields would increase
a. Would rise and yields would fall
The theory of efficient markets suggests that a. Active portfolio management will not yield a higher return than of the broad stock-market index b. Portfolio managers with sophisticated degrees will be able to outperform the market c. The "Monday effect" and "January effect" are perpetual d. Political factors only influence bond prices, and does not effect stock prices
a. Active portfolio management will not yield a higher return than of the broad stock-market index
Inflation rate volatility is a problem because it a. Adds to uncertainty, thereby diminishing an investment b. Decreases risk c. Can impact productivity in a positive way d. Can make financial decisions less difficult
a. Adds to uncertainty, thereby diminishing an investment
Which of the following, all things equal, would lead to a decrease in bond demand? a. An increase in expected inflation b. An increase in wealth c. A decrease in risk d. An increase in liquidity
a. An increase in expected inflation
Both bondholders and stockholders a. Are claimants b. Have voting rights c. Are shareholders in the company d. Received fixed payments on their securities each year
a. Are claimants
Given a choice between two investments with the same expected payoff most people will a. Choose the one with the lower standard deviation b. Choose the one with a higher standard deviation c. Be indifferent since the expected payoffs are the same d. Calculate the variance to assess the relative risks of the two choices
a. Choose the one with the lower standard deviation
The interest rate that the FOMC currently chooses to control is the a. Federal funds rate b. 30-year Treasury bond rate c. Discount rate d. Prime rate
a. Federal funds rate
The S&P 500 index a. Gives more weight to larger companies than small companies b. Actually includes more than 500 of the largest corporations in the United States c. Is a price-weighted index d. Assigns equal weight to all the prices of all the stocks in the index
a. Gives more weight to larger companies than small companies
The fact that common stockholders are residual claimants means the stockholders a. Have a claim against the revenue that remains after everyone else is paid b. Received their dividends before any other residuals are paid c. Are paid any past due dividends before other claims are paid d. Are paid before the bondholders but after any taxes are paid
a. Have a claim against the revenue that remains after everyone else is paid
The shorter the time until a payment the a. Higher the payment value b. Lower the present value because time is valuable c. Lower must be the interest rate d. Higher must be the interest rate
a. Higher the payment value
Present value is higher when the future value of the payment is a. Higher, the time payment is shorter, and the interest rate is lower b. lower, the time payment is shorter, and the interest rate is higher c. Higher, the time payment is longer, and the interest rate is lower
a. Higher, the time payment is shorter, and the interest rate is lower
Studies have found that the Fed has accommodated budget deficits by a. Increasing holdings of government securities b. Decreasing the money supply c. Increasing velocity d. Decreasing real output
a. Increasing holdings of government securities
When determining the price of a bond, as "n" increases, the ____ the value of the payment a. Lower b. Higher c. same
a. Lower
When measuring the risk of an asset a. One must measure the uncertainty about the size of future payoffs b. It is necessary to incorporate uncertainties that are not quantifiable c. One must remember that the concept of risk applies only to financial markets d. One cannot use other investment to evaluate the asset's risk
a. One must measure the uncertainty about the size of future payoffs
The Fisher equation shows that, in general, the nominal interest rate and expected interest rate are: a. Positively related b. Negatively related c. Not related
a. Positively related
Which of the following is NOT a feature of common stock? a. Stockholders receive regular fixed payments on their shares b. Stockholders have limited liability c. Stockholders are residual claimants d. Stockholders have voting rights
a. Stockholders receive regular fixed payments on their shares
When home construction industry does poorly due to a recession, this is an example of a. Systematic risk b. Idiosyncratic risk c. Risk premium d. Unique risk
a. Systematic risk
The risk that the United States falls of the face of the earth is what type of risk? a. Systematic risk b. Idiosyncratic risk c. Variance risk d. Valued added risk
a. Systematic risk (fix after this card).
As general business conditions deteriorate, all other factors constant, a. The demand for bonds will decrease b. The supply for bonds will increase c. Bond prices will decrease d. Bond yields will increase
a. The demand for bonds will decrease
An increase in expected inflation for any given nominal interest rate will cause a. The real return to bondholders to decrease b. A movement down the bond demand curve, but no change in the bond demand curve c. The bond demand curve to shift to the right d. The price of bonds to increase
a. The real return to bondholders to decrease
Considering the S&P 500 Index, if each company's stock price increased by 10%, the a. Weights in the index would remain the same b. Companies with the most shares outstanding would have even greater weight after the increase c. Companies with fewer shares would gain more weight at the expense of the companies with greater shares d. Weights in the index would change to reflect the percentage changes in the prices of the various stocks
a. Weights in the index would remain the same
Tom receives a one-year loan from ABC Bank for $5,000. At the end of the year, Tom repays $5,400 to ABC bank. Assuming the simple calculation of interest, the interest rate on Tom's loan was a. $190 b. 8% c. 7.41% d. 20%
b. 8%
The return on bonds rises relative to other assets; in the bond market this will result in a. The price of bonds falling and the yields increasing b. A rightward shift in the bond supply curve c. A shift to the left of the bond demand curve d. An increase in bond prices
b. A rightward shift in the bond supply curve
The federal funds rate is the interest rate a. The Fed charges banks who borrow from it b. Banks charge each other for overnight loans on excess reserves held at the Fed c. The US Treasury charges banks that need emergency funds d. The FDIC charges banks that need to borrow from it to meet depositor demands
b. Banks charge each other for overnight loans on excess reserves held at the Fed
In the US, monetary policy is formed by a. An individual advised by a close group of people b. Committee c. The president and approved by congress d. The Chairman of the Federal Reserve
b. Committee
To be independent, a central bank must have a. Policies that can be overturned only by the President b. Control of its own budget c. Board members who are appointed for very short terms d. The chairperson serve as a member of the president's cabinet
b. Control of its own budget
Empirical research seems to verify that a. Countries that have less independent central banks experience lower rates of inflation b. Countries with high rates of inflation seem to have central banks with low levels of independence c. There is no relationship between independence of central banks and rates of inflation d. The rate of inflation seems to vary directly with the amount of central bank independence
b. Countries with high rates of inflation seem to have central banks with low levels of independence
Most corporate bonds are a. Consols b. Coupon bonds c. Municipal bonds d. Fixed-payment loans
b. Coupon bonds
Which of the following is NOT one of the criteria used for judging a central bank's independence? a. Budgetary independence b. Electing Chairman of the Fed from member banks c. Irreversible decisions d. Long term in offices e. All are three criteria for judging a central bank's independence
b. Electing Chairman of the Fed from member banks
If the quantity of bonds supplied exceeds the quantity of bonds demanded, bond prices would a. Rise and yields would fall b. Fall and yields would rise c. Rise but yields will remain constant d. Fall and yields would fall
b. Fall and yields would rise
The Central Bank in the United States is the a. Bank of America b. Federal Reserve c. US Treasury d. Bank of the United States
b. Federal Reserve
The greater the standard deviation, the a. Lower the return b. Greater the risk c. Lower the risk d. Lower the risk and return
b. Greater the risk
High oil prices tend to harm the auto industry and benefit oil companies; therefore, high oil prices are an example of a. Systematic risk b. Idiosyncratic risk c. Neither systematic nor idiosyncratic risk d. Both systematic and idiosyncratic risk
b. Idiosyncratic risk
Stable inflation implies that a. The rate of inflation averaged over many years is zero b. Inflation is predictable c. The rate of inflation conceals relative price change d. There are low rates of inflation
b. Inflation is predictable
The Chairman of the Board of Governors a. Serves a four-year term that cannot be renewed b. Is appointed by the US President, selected from the Board of Governors c. Serves the same four-year term as the US President d. Serves an eight-year term
b. Is appointed by the US President, selected from the Board of Governors
Risk a. Cannot be quantified b. Is best measured relative to a benchmark c. Doesn't exist if there is a single random event d. Can be measured without knowing all of the possible outcomes
b. Is best measured relative to a benchmark
If the probability of an outcome equals one, the outcome a. Is more likely to occur than the others listed b. Is certain to occur c. Is certain not to occur d. Has unquantifiable risk
b. Is certain to occur
Stock market bubbles are a. The increase in a stock's price resulting from reported higher profits by a firm b. Persistent and expanding gaps between stock's actual prices and the prices warranted by the fundamentals c. Synonymous to stock market crashes d. Those periods of time when the overall level of the stock market is rising at a slow rate reflecting market fundamentals
b. Persistent and expanding gaps between stock's actual prices and the prices warranted by the fundamentals
A coupon bond is a bond that a. Always sells at a price that is less than the face value b. Provides the owner with regular payments c. Pays the owner the sum of the coupons at the bond's maturity d. Pays a variable coupon rate depending on the bond's price
b. Provides the owner with regular payments
Which one of the following would not be included in a definition of risk? a. Risk is a measure of uncertainty b. Risk can always be avoided at no cost c. Risk has a time horizon d. Risk usually involves some future payoff
b. Risk can always be avoided at no cost
When the press discussed actions from the Fed, they most likely mean: a. The Secretary of Treasury b. The FOMC c. The Fed's marketing department d. The head of the Federal Reserve Bank of New York
b. The FOMC
The three branches of the Federal Reserve System include each of the following, except which one? a. The Board of Governors b. The Federal Deposit Insurance Corporation c. The Federal Open Market Committee d. The 12 regional Federal Reserve Banks
b. The Federal Deposit Insurance Corporation
The most common form of zero-coupon bonds found in the United States is a. AAA rated corporate bonds b. US Treasury bills c. 30-year US treasury bonds d. Municipal bonds
b. US Treasury bills
How does compound interest make your money "work for you"? a. Provides interest deduction when you pay loan off early b. You earn interest on interest in addition to interest on principal c. Provides an interest deduction if you take out a loan for longer than one year d. Provides higher interest rates on larger loans with longer time horizons
b. You earn interest on interest in addition to interest on principal
Compound interest means that a. You get an interest deduction for paying your loan off early b. You get interest on interest c. You get an interest deduction for taking a loan for more than one year d. Interest rates will rise on larger loans
b. You get interest on interest
The Federal Reserve Board forecast for the economy right before the Great Recession a. suggested that a recession was imminent b. suggested that there would not be a recession c. suggested that recessions only occur due to expansionary policy d. suggested that the Great Recession would be worse than the Great Depression
b. suggested that there would not be a recession
Investment A pays $1,200 half of the time and $800 half of the time. Investment B pays $1400 half of the time and $600 the other half. Which is true? a. Investment A and B have same expected value, but A has greater risk b. Investment B has a higher expected value than A, but also greater risk c. Investment A and B have the same expected value, but A has lower risk than B
c. Investment A and B have the same expected value, but A has lower risk than B
The expected value of an investment a. Is what the owner will receive in 5 years b. Is the sum of the payoffs c. Is the probability-weighted sum of the possible outcomes d. Cannot be determined in advance
c. Is the probability-weighted sum of the possible outcomes
Why is measuring and assessing risk important in the study of financial markets? a. Risk must be avoided at all costs b. Positive payoffs always outweigh losses c. Measuring risk is necessary in calculating a fair price for transferring risk d. It led to the discovery that changes in risk do not affect demand for financial instruments
c. Measuring risk is necessary in calculating a fair price for transferring risk
A component required for truly independent central banks include a. A budget controlled by Congress b. The ability to have policies reversed by Congress or the President c. Monetary policies that cannot be reversed by someone outside of the central bank d. Chairperson of the bank is answerable only to the President
c. Monetary policies that cannot be reversed by someone outside of the central bank
All other factors held constant, an investment with a. More risk should offer a lower return and sell for a higher price b. Less risk should sell for a lower price and offer a higher expected return c. More risk should sell for a lower price and offer a higher expected return d. Less risk should sell for a lower price and offer a lower return
c. More risk should sell for a lower price and offer a higher expected return
Buying and selling US Treasury Securities for the Fed's own portfolio is called a. Managing the float b. Discount buying c. Open market operations d. Reserve adjustment
c. Open market operations
To say monetary policy is transparent implies that a. Anyone could figure out what the correct policy should be b. Monetary policy should not be so difficult that most people couldn't understand it c. Policy makers offer plausible explanations for their decisions along with supporting data d. When faced with the same problem, policy makers will always react the same way
c. Policy makers offer plausible explanations for their decisions along with supporting data
The Governors of the Federal Reserve System are appointed by the a. Member banks from their home district b. Board of Directors of the Reserve Bank from their home districts c. President of the United States d. Chairman of the Federal Reserve System
c. President of the United States
Studies have found that Fed banks that have generated negative publicity for the Fed a. Were replaced by new Fed banks b. Saw the Fed Chair fire the region's president c. Saw a decrease in the growth of their budget d. Saw a decrease in their stock holdings
c. Saw a decrease in the growth of their budget
A share of common stock represents a(n) a. Claim from a lender against a borrower b. Share in the company's debts c. Share of ownership of the company d. Unlimited liability to the owner of the stock
c. Share of ownership of the company
Central banks have the most control over: a. The unemployment rate b. The economy's growth rate c. Short-term interest rates d. Tax rates
c. Short-term interest rates
If the US government's borrowing needs increase, all other factors constant, the a. Demand for bonds will decrease b. Price of bonds will increase c. Supply of bonds will increase d. Yields on bonds will decrease
c. Supply of bonds will increase
The real power in the FOMC lies with a. The President of the New York Fed Bank b. The System Open Market Manager c. The Chairman of the Board of Governors d. No single individual; all participants have an equal share of power
c. The Chairman of the Board of Governors
The interest rate changes that result from the FOMC meetings can only be altered by a. Congress b. The Secretary of the Treasury during an economic crisis c. The FOMC d. The US President during a time of crisis
c. The FOMC
Nixon was pressuring ______, according to the Abrams paper covered in class a. The Vice President b. The Secretary of Defense c. The Federal Reserve Chair d. The Secretary of the Treasury
c. The Federal Reserve Chair
The Dow Jones Industrial Average is a. An index made up of the stock prices of the 100 largest corporations in the US b. An index that measures the value of purchasing 100 shares in each of the corporations that make up the index c. The average price of stock in 30 of the largest companies in the US d. The broadest measure of stock market performance
c. The average price of stock in 30 of the largest companies in the US
The difference in the prices of a zero-coupon bond and a coupon bond with the same face value and maturity date is simply a. Zero, since they are the same b. The present value of the final payment c. The present value of the coupon payments d. The future value of the coupon payments
c. The present value of the coupon payments
The Fed is composed of a. Five branches with clear responsibilities b. Six branches with overlapping responsibilities c. Three branches with overlapping responsibilities d. Twelve branches with clear responsibilities
c. Three branches with overlapping responsibilities
A borrower who makes a $1000 loan for one year and earns interest in the amount of $75, earns what nominal interest rate and what real interest rate if inflation is 2.0%? a. A nominal rate of 5.5% and a real rate of 2.0% b. A nominal rate of 7.5% and a real rate of 5.0% c. A nominal rate of 7.5% and a real rate of 9.5% d. A nominal rate of 7.5% and a real rate of 5.5%
d. A nominal rate of 7.5% and a real rate of 5.5%
Changes in the federal funds rate influence the economy's growth rate through all of the following except by a. Making it more or less attractive to save b. Making it more or less expensive to borrow c. Making investment spending more or less attractive d. Altering the real interest rate when inflation is changing quickly
d. Altering the real interest rate when inflation is changing quickly
Time consistency is critical for economic policy to be credible because a. People make decisions today with no regard for the future b. The ability to update decisions over time is necessary for policy to be effective c. It is not possible to improve outcomes by limited discretion in future time periods d. An effective policy is a strategy for the future, so it must be costly for policymakers to change their minds
d. An effective policy is a strategy for the future, so it must be costly for policymakers to change their minds
Whenever central banks face more than one goal, they policy framework requires a. Central bankers to always focus on inflation first b. Central bankers to focus on all goals, no matter what c. Economic growth to be secondary to stock prices d. Central bankers to make their priorities clear
d. Central bankers to make their priorities clear
According to the "Money and Rule of Law" discussed in class, _____ performs poorly a. General monetary constitutions b. Rule-based monetary governance c. Cryptocurrencies d. Discretionary monetary authorities
d. Discretionary monetary authorities
What did Nixon want Arthur Burns to do (with respect to monetary policy)? a. Engage in restrictive monetary policy right after the 1972 election b. Engage in restrictive monetary policy right before the 1972 election c. Engage in expansionary monetary policy right after the 1972 election d. Engage in expansionary monetary policy right before the 1972 election
d. Engage in expansionary monetary policy right before the 1972 election
Most home mortgages are good examples of a. Consols b. Zero coupon bonds c. Coupon bonds d. Fixed-payment loans
d. Fixed-payment loans
If interest rates are expected to fall, bond prices will a. Fall as the demand for bonds decrease b. Remain constant until interest rates actually change c. Fall as people fear capital losses in the future d. Increase due to the demand for bonds increase
d. Increase due to the demand for bonds increase
One monopoly that central banks have is in a. Regulating commercial banks b. Making loans to banks c. Issuing US securities d. Issuing currency
d. Issuing currency
Stock market bubbles are costly for the economy because they a. Imply that the actual stock price is equal to the fundamental value of the stock b. Hurt consumers more than corporations c. Lead to a reduction in real investment in both the short term and long term d. Lead to a misallocation of resources in both the short term and long term
d. Lead to a misallocation of resources in both the short term and long term
The price of a coupon bond can be best described as the a. Present value of the face value b. Future value of the coupon payments c. Future value of the coupon payments and the face value d. Present value of the face value plus the present value of the coupon payments
d. Present value of the face value plus the present value of the coupon payments
Compounding refers to the a. Calculation of the after tax interest returns b. Internal rate of return a firm earns on an investment c. Real interest return post-tax d. Process of earning interest on both the principal and the interest of an investment
d. Process of earning interest on both the principal and the interest of an investment
The price of a coupon bond will increase as the a. Face value decreases b. Yield increases c. Coupon payments increase d. Term to maturity is shorter
d. Term to maturity is shorter
The Reserve Banks of the Federal Reserve System are owned by a. The taxpayers in their districts b. The US Treasury c. The Board of Governors d. The commercial banks in their districts
d. The commercial banks in their districts
Doubling the future value will cause a. The present value to fall in half b. The interest rate to double c. No charge to present value, only the interest rate d. The present value to double
d. The present value to double
Inflation presents risk because a. Inflation is always present b. Inflation cannot be measured c. There are different ways to measure it d. There is no certainty regarding what inflation will be in the future
d. There is no certainty regarding what inflation will be in the future
According to the article "What did the Fed know in the Great Recession?", which of the following is a lesson suggested by the author? a. Fed economists should revise their forecasting models b. Economists should pay more attention to knowledge problems at the Fed c. Fed's poor forecasting record should make us skeptical of its ability to effectively manage the money supply in times of economic turmoil d. Economists should elect Federal Board members, because we can expect them to pick smarter people e. All of the above f. A, B, and C only
f. A, B, and C only
