The Fed pursues its key objectives by ________.
A) influencing short-run and long-term interest rates
B) determining the efficient level of government spending
C) influencing market prices through price ceilings and price floors
D) providing loans to new firms and businesses at extremely low rates of interest

Question

Quizplus · Accepted Answer

The Federal Reserve (Fed) primarily uses monetary policy tools to influence short-run and long-term interest rates, which affects the economy's performance and stability. This helps it to achieve its key objectives, such as controlling inflation, promoting economic growth, and maximizing employment. The Fed does not determine government spending, set price ceilings or floors, or provide loans to specific firms or businesses at extremely low rates of interest. These functions are often carried out by other entities, such as Congress, regulatory agencies, and commercial banks.

The Fed Pursues Its Key Objectives by ________