When it comes to choosing an policy instrument,both the ________ rate and ________ aggregates are measured accurately and are available daily with almost no delay.
A)three-month T-bill;monetary
B)three-month T-bill;reserve
C)federal funds;monetary
D)federal funds;reserve

Question

Quizplus · Accepted Answer

The federal funds rate is the interest rate at which banks lend and borrow reserves from each other overnight, and it is set by the Federal Reserve through open market operations. The level of reserves held by banks is a key component of monetary policy, as it affects the ability of banks to lend and the overall level of money in the economy. Both the federal funds rate and reserve aggregates are measured accurately and are available daily with almost no delay, making them useful for the Federal Reserve to adjust its policy instrument in response to changing economic conditions. The three-month T-bill rate is less directly related to the Federal Reserve's policy instrument and is subject to market forces in addition to monetary policy.

When It Comes to Choosing an Policy Instrument,both the ________