It is easy for the Fed to keep real GDP near potential GDP by varying the interest rate.

Name: It is easy for the Fed to keep real GDP near potential GDP by varying the interest rate.
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Question

Quizplus · Accepted Answer

While the Federal Reserve can influence economic activity by adjusting interest rates, it is challenging to precisely manage real GDP and keep it near potential GDP due to unpredictable economic shocks, the complex nature of the economy, and the lagged effect of monetary policy.

It Is Easy for the Fed to Keep Real GDP