In its day-to-day operations,the Fed focuses on
A) an unemployment rate target
B) an inflation rate target
C) an interest rate target
D) a money demand curve target
E) several economic targets together

Question

Quizplus · Accepted Answer

The Fed focuses on an interest rate target, specifically the federal funds rate, which is the interest rate at which banks lend reserves to each other overnight. The Fed adjusts this rate to influence other interest rates in the economy and achieve its overall policy goals. While the Fed considers other economic variables such as inflation and unemployment in its decision-making, its primary policy tool is setting the federal funds rate.

In Its Day-To-Day Operations,the Fed Focuses on