If the desired intermediate target is a monetary aggregate,then the preferred policy instrument will be a(n)________ variable like the ________.
A)interest rate; three-month T-bill rate
B)interest rate; federal funds rate
C)reserve aggregate; monetary base
D)reserve aggregate; narrow money supply M1

Question

Quizplus · Accepted Answer

When the intermediate target is a monetary aggregate, the preferred policy instrument is a reserve aggregate like the monetary base, as it directly influences the money supply.

If the Desired Intermediate Target Is a Monetary Aggregate,then the Preferred