Which of the following statements is correct?
A)The Fed exercises complete control over the money supply, but only partial control over the real interest rate.
B)The Fed exercises complete control over the real interest rate, but only partial control over the money supply.
C)The Fed exercises complete control over both the real interest rate and the money supply.
D)The Fed exercises complete control over neither the real interest rate nor the money supply.

Question

Quizplus · Accepted Answer

The Fed does not have complete control over the money supply due to factors like bank lending behavior and currency demand. It also cannot fully control the real interest rate, which is influenced by market forces and economic conditions.

Which of the Following Statements Is Correct