One of the Fed's greatest powers is its ability to:
A) boost market confidence.
B) perfectly control the supply of M1 and M2.
C) help stabilize commodity prices.
D) always keep a nation on its LRAS curve.

Question

Quizplus · Accepted Answer

The Fed's ability to boost market confidence is a powerful tool in mitigating potential economic downturns or crises. By signaling to markets that it will take steps to support the economy, the Fed can prevent panic and instability. However, the Fed cannot perfectly control the supply of money or stabilize commodity prices, and it cannot keep a nation on its LRAS curve in the face of external shocks or unexpected events.

One of the Fed's Greatest Powers Is Its Ability To