The Fed's use of the federal funds rate as an operating target in the 1970s resulted in
A)countercyclical monetary policy.
B)too slow growth in M1 throughout the decade.
C)procyclical monetary policy.
D)too rapid growth in M1 throughout the decade.

Question

Quizplus · Accepted Answer

The use of the federal funds rate as an operating target in the 1970s resulted in procyclical monetary policy, as the Fed would raise interest rates to combat inflation during periods of economic expansion, which could further slow down economic growth. This approach led to criticism that the Fed was exacerbating business cycles rather than smoothing them out.

The Fed's Use of the Federal Funds Rate as an Operating