The ability of a central bank to set monetary policy is <u>instrument independence</u> while the ability of a central bank to set goals of monetary policy is <u>goal independence</u>.
Monetary policy is the control of the quantity of cash available in an economy and the channels via which new money is supplied. With the aid of coping with the cash delivery, central bank goals to steer macroeconomic factors which include inflation, the charge of intake, monetary growth, and standard liquidity.
Financial coverage refers to the steps taken by way of a country's primary financial institution to manipulate the cash supply for monetary balance. As an example, policymakers manage the cash stream for increasing employment, GDP, and charge balance by the use of gear inclusive of hobby prices, reserves, bonds, etc.
The dreams of economic policy are to sell most employment, solid expenses, and moderate long-term interest prices. By means of imposing powerful monetary policy, the Fed can hold strong prices, thereby helping conditions for lengthy-term financial increases and most employment.
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Answer: 500
Explanation:
At equilibrium, it should be noted that,
Y = C + I + G
where ,
C = Consumption = 20 + 0.7(Y - T)
I = Investment = 100
G = Government expenditure = 100
Y = C + I + G
Y = 20 + 0.7(Y - 100) + 100 + 100
Y = 20 + 0.7Y - 70 + 200
Y - 0.7Y = 150
0.3Y = 150
Y = 150/0.3
Y = 500
Answer: Option B
Explanation: In simple words, diversification refers to the process of allocating capital in different investments to reduce the overall risk of the investment portfolio.
Therefore, analyst tries to make portfolio in such a way that securities will be negatively correlated. If two securities are negatively correlated then the decrease of one will lead to proportionate increase of others.
This ensures that the investors money will not be depreciated but at the same time the potential for abnormal returns also decreases.
