The Fed cannot predict the effects of open-market operations with perfect accuracy because of
A)changes in people's desires for cash.
B)foreigners desire to hold U.S.dollars.
C)banks' desires to hold excess reserves.
D)all of the above are correct.

Question

Quizplus · Accepted Answer

All of the factors listed (changes in people's desires for cash, foreigners' desire to hold U.S. dollars, and banks' desires to hold excess reserves) can impact the effectiveness of open-market operations and are difficult for the Fed to predict with perfect accuracy. Therefore, option D is the correct answer.

The Fed Cannot Predict the Effects of Open-Market Operations with Perfect