If the economy does not respond to the Fed's tools of policy, the Fed is very limited in what else it can do to correct economic imbalances.

Question

Quizplus · Accepted Answer

The Federal Reserve (Fed) has a limited set of tools, primarily interest rate adjustments, open market operations, and reserve requirements. If these tools do not influence the economy as expected, the Fed's ability to correct economic imbalances is significantly constrained.

If the Economy Does Not Respond to the Fed's Tools