The Fed's ability to simultaneously control the rate of growth of the money supply and the level of interest rates is impeded by changes in the

Question

Quizplus · Accepted Answer

The Fed's ability to simultaneously control the rate of growth of the money supply and the level of interest rates is impeded by changes in the demand curve for money. If the demand for money changes, it affects the interest rates, which in turn affects the rate of growth of the money supply. This creates a feedback loop, making it very difficult for the Fed to control both variables at the same time.

The Fed's Ability to Simultaneously Control the Rate of Growth