After 1987, the Federal Reserve shifted its focus away from targeting M1 growth due to its unpredictable relationship with economic variables. Instead, it continued to monitor M2, which includes a broader set of financial assets and is considered more stable and representative of economic conditions.

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After 1987, the Fed

Question 30

Multiple Choice

After 1987, the Fed

A) stopped targeting M1 growth, but continued to target M2 growth.
B) stopped targeting M2 growth, but continued to target M1 growth.
C) stopped targeting either M1 or M2 growth.
D) continued to target both M1 and M2 growth.

Correct Answer: