Over the past 40 years,the most frequent target for the Fed's monetary policy has been
A)the prime interest rate
B)the federal funds rate
C)the M1 money supply
D)the M2 money supply
E)the M3 money supply

Question

Quizplus · Accepted Answer

The federal funds rate is the rate at which depository institutions lend reserve balances to other depository institutions overnight. It is a key interest rate that affects the cost of borrowing and lending throughout the economy, and therefore it has been the primary target for the Fed's monetary policy over the past 40 years. The Fed adjusts the federal funds rate by using open market operations to buy or sell government securities, which increases or decreases the supply of reserves in the banking system and thereby affects the demand for overnight loans.

Over the Past 40 Years,the Most Frequent Target for the Fed's