In using an interest rate target,
A)the rate is raised if there is a desire to slow down the level of economic activity.
B)the rate is lowered if there is a desire to speed things up.
C)the Fed has eliminated monitoring the money aggregates.
D)Both a and b are correct.

Question

Quizplus · Accepted Answer

A higher interest rate will discourage borrowing and spending, which slows down economic activity. Conversely, a lower interest rate will encourage borrowing and spending, which speeds up economic activity. The Fed still monitors money aggregates, but they are no longer the primary target of monetary policy.

In Using an Interest Rate Target