When the Federal Reserve engages in forward guidance, it:
A) provides consumers with recommendations about the things that they should do financially over the next year.
B) meets with congressional leaders to give guidance on fiscal policy.
C) regulates key financial markets to prevent their failure as the economy moves forward.
D) announces in advance the types of policies that it will enact over a time period into the future.

Question

Quizplus · Accepted Answer

Forward guidance is a monetary policy tool used by central banks, like the Federal Reserve, to communicate to the public about the future direction of monetary policy. This can include signaling future interest rate decisions or policy actions to influence economic expectations and behaviors.

When the Federal Reserve Engages in Forward Guidance, It