The Federal Reserve has indirect control over short term interest rates and as a result their ability to control economic activity is through
A)aggregate supply.
B)residual demand.
C)aggregate demand.
D)the exchange rate.

Question

Quizplus · Accepted Answer

The Federal Reserve's ability to control economic activity is primarily through aggregate demand. By increasing or decreasing the money supply, the Fed can influence interest rates and borrowing costs, which in turn affect consumer and business spending. This can lead to changes in aggregate demand, which drives economic activity in the short term.

The Federal Reserve Has Indirect Control Over Short Term Interest