Traditionally, the Fed often communicated its intentions to restrict or expand monetary policy by announcing a change in its target for the
A) prime rate.
B) federal funds rate.
C) discount rate.
D) consumer price index.

Question

Quizplus · Accepted Answer

The Fed typically communicates its intentions to restrict or expand monetary policy by announcing a change in its target for the federal funds rate. This is because the federal funds rate is the interest rate at which banks lend reserves to one another overnight, and it has a significant influence on a variety of other interest rates in the economy.

Traditionally, the Fed Often Communicated Its Intentions to Restrict or Expand