The Federal Open Market Committee
A)operates with almost complete discretion over monetary policy.
B)is required to increase the money supply by a given growth rate each year.
C)is required to keep short-term interest rates within a range set by Congress.
D)is required by its charter to change the money supply using a complex formula that concerns the tradeoff between inflation and unemployment.

Question

Quizplus · Accepted Answer

The Federal Open Market Committee, as a part of the Federal Reserve System, operates with almost complete discretion over monetary policy. It can adjust interest rates, buy or sell government securities, and make other moves that affect the money supply and overall economy. However, it does have to follow the general goals set by Congress, such as promoting full employment and stable prices, and report its actions to Congress. But it does not have specific numerical targets or formulas to follow.