Due to the lack of timely data for the price level and economic growth,the Fed's strategy
A)targets the exchange rate,since the Fed can control this variable.
B)targets the price of gold,since it is closely related to economic activity.
C)uses an intermediate target,such as an interest rate.
D)stabilizes the consumer price index,since the Fed can control the CPI.

Question

Quizplus · Accepted Answer

Using an intermediate target, such as an interest rate, allows the Fed to adjust monetary policy based on current economic conditions and market indicators, even without perfect information about the price level or economic growth. This approach provides flexibility and can help promote stability in the economy over the long term. Targeting exchange rates or gold prices can be volatile and subject to external factors beyond the Fed's control, while stabilizing the CPI alone may not be sufficient to address other important aspects of economic activity.

Due to the Lack of Timely Data for the Price