If the Federal Reserve sets a fixed rate for money supply growth, it is using
A) fiscal policy.
B) inflation targeting.
C) monetary targeting.
D) the Taylor rule.

Question

Quizplus · Accepted Answer

The Federal Reserve setting a fixed rate for money supply growth is an example of monetary targeting, as it involves manipulating the money supply to reach a specific inflation target. Fiscal policy involves government spending and taxation, inflation targeting is a policy framework for achieving a specific inflation rate, and the Taylor rule is a guideline for setting interest rates based on inflation and output.

If the Federal Reserve Sets a Fixed Rate for Money