By the time of the annual monetary policy conference in Jackson Hole,Wyoming in 2016,
A) the monetary base and the Fed's balance sheet remained very large, and the target for the federal funds rate had only slightly risen.
B) the monetary base and the Fed's balance sheet decreased dramatically, but the target for the federal funds rate had only slightly risen.
C) the monetary base and the Fed's balance sheet remained very large, but the target for the federal funds rate had returned to its pre-financial-crisis level.
D) the monetary base and the Fed's balance sheet, as well as the target for the federal funds rate, had returned to pre-financial-crisis levels.

Question

Quizplus · Accepted Answer

The question asks about the state of the monetary base, the Fed's balance sheet, and the target for the federal funds rate by the time of the conference in Jackson Hole in 2016. According to the information provided in the answer choices, only choice A indicates that the monetary base and the Fed's balance sheet remained very large (suggesting that the Fed had not yet fully unwound its post-financial-crisis stimulus measures), and that the target for the federal funds rate had only slightly risen (suggesting that the Fed was proceeding cautiously with interest rate normalization). Choice B suggests that the monetary base and the Fed's balance sheet had decreased dramatically, which is inconsistent with the fact that the Fed had not yet completed its balance sheet normalization process in 2016. Choices C and D suggest that the target for the federal funds rate had returned to pre-financial-crisis levels, but this is not consistent with the fact that the target rate had only slightly risen by 2016.

By the Time of the Annual Monetary Policy Conference in Jackson