In General,if a Central Bank Chooses to Target the Money

question 65

Multiple Choice

In general,if a central bank chooses to target the money supply in its implementation of monetary policy,then

• A)the interest rate is determined by monetary equilibrium,and cannot be precisely predicted because of possible shocks to money demand.
• B)the interest rate can be more carefully controlled.
• C)implementation of policy is more straightforward because money supply is more easily controlled than the interest rate.
• D)the interest rate is determined by the Minister of Finance.
• E)the implementation of policy is more straightforward because the central bank can control the process of deposit creation.

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