Having interest rate stability
A)allows for less uncertainty about future planning.
B)leads to demands to curtail the Fed's power.
C)guarantees full employment.
D)leads to problems in financial markets.

Question

Quizplus · Accepted Answer

Interest rate stability allows individuals and businesses to make more accurate predictions about the cost of borrowing and the return on investments, reducing uncertainty and allowing for more effective long-term planning.

Answer: B
 Interest rate stability, particularly at low levels, may be seen as limiting the actions of the Federal Reserve, leading to demands to curtail or limit their power.

Answer: D
 Interest rate stability can lead to problems in financial markets if rates are kept artificially low or high for extended periods, potentially causing bubbles or other distortions in the market. Interest rate fluctuations are often seen as a necessary mechanism to regulate market growth and prevent these issues.

Answer: C
 Interest rate stability may contribute to full employment by providing a stable environment for businesses to invest and grow, but it is not a guarantee of full employment on its own. Other factors, such as government policies and industry trends, also play a role in determining employment levels.

Having Interest Rate Stability