The Fed can use which of the following as an intermediate target?
A)the level of real GDP
B)the level of nominal GDP
C)both an interest rate and a monetary aggregate at the same time
D)either a monetary aggregate or an interest rate but not at the same time

Question

Quizplus · Accepted Answer

The Fed can use either a monetary aggregate or an interest rate as an intermediate target, but not both at the same time. This is known as the monetary policy "dual mandate" of promoting price stability and maximum employment. The Fed typically uses the federal funds rate as an interest rate target and a monetary aggregate such as M1 or M2 as a secondary target. The level of real or nominal GDP is not typically used as an intermediate target, but rather as an indicator of the overall health of the economy.

The Fed Can Use Which of the Following as an Intermediate