Which of the following statements is correct?
A)Through autonomous monetary policy adjustments the Federal Reserve can target any inflation rate in the long run.
B)Ultimately,autonomous monetary policy adjustments by the Federal Reserve cannot determine the equilibrium real interest rate in the long run.
C)Ultimately,autonomous monetary policy adjustments by the Federal Reserve cannot determine long run aggregate output.
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The Federal Reserve can influence inflation rates in the short term but cannot target any inflation rate in the long run due to various economic factors and constraints. Additionally, the equilibrium real interest rate and long-run aggregate output are determined by real economic factors such as productivity and demographics, not by monetary policy adjustments. Therefore, all of the statements are correct in highlighting the limitations of autonomous monetary policy adjustments by the Federal Reserve in the long run.

Which of the Following Statements Is Correct