The Federal Reserve can:
A)simultaneously set independent money supply and nominal interest rate targets.
B)only target the nominal interest rate, not the money supply.
C)only set a money supply target that is consistent with a nominal interest rate target, and vice versa.
D)only target the money supply, not the nominal interest rate.

Question

Quizplus · Accepted Answer

The Federal Reserve can set a target interest rate or a target money supply, but not both. The money supply is within the Fed's control but money demand is not.

The Federal Reserve Can