There is considerable disagreement about whether the Fed should
A)engage in open market operations
B)have the power to set reserve requirements
C)reduce the money supply when the economy is growing
D)allow banks to invest in the stock market
E)attempt to control interest rates or should instead attempt to control the money supply

Question

Quizplus · Accepted Answer

There is ongoing debate among economists about the most effective approach for the Fed to achieve its dual mandate of promoting maximum employment and price stability. However, many experts argue that the Fed should focus on controlling the money supply rather than interest rates. This approach, known as monetary targeting, involves setting specific targets for the growth of the money supply and adjusting policy actions accordingly. By contrast, relying on interest rate manipulation can be less effective, as changes in rates may not have the desired impact on spending and investment behavior. Therefore, the best choice is for the Fed to attempt to control the money supply.

There Is Considerable Disagreement About Whether the Fed Should