Why Does the Fed Have Imperfect Control Over the Money

question 168

Multiple Choice

Why does the Fed have imperfect control over the money supply?

• A)Because the Fed does not know how much reserves will change when it buys or sells securities.
• B)Because of unpredictable changes in the public's desire to hold cash and banks' desires to hold reserves.
• C)Because of unpredictable changes in reserve requirements.
• D)Because of the secrecy of FOMC meetings, which lead to policy surprises.

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