Over the past 40 years, the most frequent target of the Fed's monetary policy has been the _____
A) prime interest rate.
B) federal funds rate.
C) M1 money supply.
D) M2 money supply.
E) unemployment rate.

Question

Quizplus · Accepted Answer

The Federal Reserve's main tool for implementing monetary policy is open market operations, which affect the federal funds rate. The federal funds rate is the interest rate that banks charge each other for overnight loans of federal funds, which are the reserves held by banks at the Federal Reserve. By adjusting this rate, the Fed can influence the amount of money available in the economy and affect borrowing and spending by consumers and businesses. Therefore, the most frequent target of the Fed's monetary policy has been the federal funds rate.

Over the Past 40 Years, the Most Frequent Target of the Fed's