Some have argued that the Federal Reserve looked at the wrong indicator of monetary policy, and that the Fed mistakenly thought that monetary policy was "easy" because ______.

Question

Quizplus · Accepted Answer

The Federal Reserve may mistakenly think that monetary policy is "easy" if market interest rates are low, as low interest rates can indicate that borrowing is cheaper, potentially leading to an assumption that monetary policy is accommodating or expansionary. However, low interest rates alone do not necessarily mean that overall monetary conditions are easy, as they can also result from other factors such as low inflation expectations or high demand for safe assets.

Some Have Argued That the Federal Reserve Looked at the Wrong