In making monetary policy the Fed currently

Question

Quizplus · Accepted Answer

The Fed currently focuses on the federal funds rate, which is the interest rate at which banks lend to each other overnight. By targeting this rate, the Fed tries to influence other interest rates in the economy and control inflation. The other options are not accurate: the Fed does not increase the money supply at a fixed rate each year (it can vary based on economic conditions), it has not fully adopted the monetarist view (it considers a range of economic theories), and it does not measure success by meeting fixed targets (it has flexible inflation and employment goals).

In Making Monetary Policy the Fed Currently