If the Fed Pursues a Strategy of Targeting an Interest

question 108

Multiple Choice

If the Fed pursues a strategy of targeting an interest rate when fluctuations in money demand are prevalent

• A)fluctuations of nonborrowed reserves will be small.
• B)fluctuations of nonborrowed reserves will be large.
• C)the Fed will probably quickly abandon this policy,as it did in the 1960s.
• D)the Fed will probably quickly abandon this policy,as it did in the 1950s.

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