If the central bank uses interest rate targeting, the money supply is:
A)perfectly inelastic at the current interest rate.
B)targeted by the use of open market operations.
C)fixed by the Reserve Bank of Australia.
D)perfectly elastic at the current interest rate.

Question

Quizplus · Accepted Answer

When the central bank uses interest rate targeting, it adjusts the money supply as needed to maintain the target interest rate, making the money supply perfectly elastic at the current interest rate.

If the Central Bank Uses Interest Rate Targeting, the Money