In recent years,the Federal Reserve has conducted policy by setting a target for
A)bank reserves.
B)the monetary growth rate.
C)the exchange rate.
D)the federal funds rate.

Question

Quizplus · Accepted Answer

The Federal Reserve conducts monetary policy by setting a target for the federal funds rate, which is the interest rate at which banks lend reserves to each other overnight. By adjusting the target rate, the Fed can influence short-term interest rates, which can in turn affect borrowing, investment, and spending throughout the economy. The Fed does not target bank reserves or the exchange rate, and while it monitors monetary growth rates, it does not currently set a specific target for this variable.

In Recent Years,the Federal Reserve Has Conducted Policy by Setting