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The Keynesian view of the appropriate operating procedures and goals of monetary policy is that: A.The...

The Keynesian view of the appropriate operating procedures and goals of monetary policy is that:

A.The Federal Reserve should target the growth of a monetary aggregate with the primary goal being full employment and high growth, and a secondary goal of price stability.

B.The Federal Reserve should target both the growth of a monetary aggregate and the level of interest rates with the primary goal being full employment and high economic growth, and a secondary goal of price stability.

C.The Federal Reserve should target the growth of a monetary aggregate with the primary goal being price stability, and a secondary goal of full employment and high economic growth.

D.The Federal Reserve should target the level of interest rates with the primary goal being full employment and high economic growth, and a secondary goal of price stability.

E.The Federal Reserve should target the level of interest rates the primary goal being price stability, and a secondary goal of full employment and high economic growth.

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Answer #1

Stability of price level was never a concern for keynesian economics because it always considered price to be sticky in the short run. What are the Federal Reserve should do is to keep the interest rate low so that investment and consumption demand are increased and aggregate demand can be stimulated. This makes the real GDP and economic growth a Priority for the Federal Reserve.

Select option d.

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