If the Desired Intermediate Target Is an Interest Rate,the Preferred

question 67

Multiple Choice

If the desired intermediate target is an interest rate,the preferred policy instrument would be

• A)the federal funds rate.
• B)the monetary base.
• C)nonborrowed reserves.
• D)borrowed reserves.
• E)the discount rate.

---

Definitions:

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for overseeing American monetary policy and financial system regulation.

Bank Failures

Occurrences when a bank is unable to meet its obligations to depositors or creditors and ceases operations, often resulting in regulators seizing the institution.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, marked by massive unemployment and widespread poverty.

Lost Confidence

A situation where consumers or investors become pessimistic about the economic prospects, leading to reduced spending and investment.