In recent years,the Fed has chosen to target interest rates rather than the money supply because
A)Congress passed a law requiring them to do so.
B)the President requested them to do so.
C)the money supply is hard to measure with sufficient precision.
D)changes in the interest rate change aggregate demand,but changes in the money supply do not.

Question

Quizplus · Accepted Answer

The Fed has chosen to target interest rates rather than the money supply because the money supply is hard to measure with sufficient precision. This makes it difficult to accurately predict how changes in the money supply will affect the economy. By targeting interest rates instead, the Fed can more easily influence borrowing and spending behavior, which in turn affects the money supply and the overall economy.

In Recent Years,the Fed Has Chosen to Target Interest Rates