An important problem facing the Fed is that
A)it has goals for economic growth and price stability, but no direct control over real output or the price level.
B)it lost effective control over the monetary base.
C)it has been given responsibility for meeting policy goals, but true control over monetary policy remains with Congress.
D)it has been given responsibility for meeting policy goals, but true control over monetary policy remains with the President.

Question

Quizplus · Accepted Answer

The Fed has goals for economic growth and price stability, but it does not have direct control over real output or the price level. Its tools, such as open market operations and reserve requirements, can influence the money supply and interest rates, but ultimately the economy and price level are affected by a variety of factors beyond the Fed's control. This creates a challenge for the Fed in achieving its policy goals.

An Important Problem Facing the Fed Is That