In the 1970s,the Fed selected an interest rate as an operating target rather than a reserve aggregate primarily because it
A)had no interest in targeting a monetary aggregate,as evidenced by its unwillingness to target a reserve aggregate.
B)was still very concerned with achieving interest rate stability.
C)was committed to targeting free reserves.
D)was committed to the real bills doctrine.

Question

Quizplus · Accepted Answer

The Fed selected an interest rate as an operating target primarily because it was still concerned with achieving interest rate stability. In the 1970s, the Fed shifted away from targeting monetary aggregates like reserves because of the instability of the relationship between monetary aggregates and economic activity. Instead, the Fed focused on setting interest rates to achieve its policy objectives.

In the 1970s,the Fed Selected an Interest Rate as an Operating