Usually, the Federal Reserve changes its target for the federal funds rate in units of
A) 1 percentage point.
B) 5 percentage points.
C) 1/4 of 1 percentage point.
D) 2 percentage points.

Question

Quizplus · Accepted Answer

The Federal Reserve typically changes its target for the federal funds rate in increments of 1/4 of 1 percentage point, also known as "25 basis points". This allows for more precise adjustments in response to changes in the economy.

Usually, the Federal Reserve Changes Its Target for the Federal