The Fed Uses the Term Target When It Announces How

question 202

Multiple Choice

The Fed uses the term target when it announces how it intends to change the federal funds rate because

• A)the change in the interest rate is a new law that all banks must adhere to.
• B)the Fed has no influence over the federal funds rate.
• C)the Fed can control the real interest rate but has no control over the nominal interest rate.
• D)the Fed expects the U.S.Treasury to conform with its monetary policy.
• E)the Fed has no direct control over interest rates and can only influence rates toward a target value.

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Definitions:

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The U.S. national legislature, made up of two chambers: the Senate and the House of Representatives.

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