The monetary policy rule "dictates":
A)the optimal rate of inflation.
B)the choice of federal funds rate.
C)the marginal product of capital.
D)the natural rate of unemployment.
E)none of the above

Question

Quizplus · Accepted Answer

The monetary policy rule dictates the choice of federal funds rate, which is the interest rate at which depository institutions lend and borrow funds from each other overnight to maintain their reserve requirements. The rule is set by the Federal Reserve and is used to influence the economy through changes in the supply of money and credit. The other options listed are not directly determined by the monetary policy rule.

The Monetary Policy Rule "Dictates