In the early 1980s, the Fed focused on the level of ________ as the ________ target.
A)nonborrowed reserves, operating
B)nonborrowed reserves, intermediate
C)borrowed reserves, operating
D)borrowed reserves, intermediate

Question

Quizplus · Accepted Answer

In the early 1980s, the Fed focused on the level of nonborrowed reserves (reserves held by banks with the Fed that are not borrowed) as the operating target. This was part of the Fed's shift towards targeting monetary aggregates, such as M1 and M2, as a way to control inflation. The goal was to increase nonborrowed reserves to a level that would support growth in these aggregate measures of the money supply.

In the Early 1980s, the Fed Focused on the Level