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.

---

Definitions:

Nociceptors

Sensory receptors present chiefly in the skin and viscera that detect harmful stimuli, signaling potential damage to the nervous system.

Electromagnetic Receptors

Sensory receptors in some animals that detect electromagnetic fields, aiding in navigation and prey location.

Sensilla

refers to sensory organs or structures in arthropods, such as insects, that detect changes in the external environment.

Electrical Potentials

The difference in electric charge between two points, which can drive the flow of electrons or ions and is fundamental in biological processes and electrical circuits.