The Main Reason the Fed Cannot Control the Real Interest

question 77

Multiple Choice

The main reason the Fed cannot control the real interest rate is that

• A)it cannot control expectations of inflation.
• B)M1 fluctuates too widely to allow interest rates to be easily controlled.
• C)M2 fluctuates too widely to allow interest rates to be easily controlled.
• D)the real interest rate is mainly determined by the behavior of banks.

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