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The Federal Reserve’s target rate for the federal funds rate a. is an extra policy tool for the central bank, in addition to and independent of the money supply. b. commits the Fed to set a particular money supply so that it hits the announced target. c. is a goal that is rarely achieved, because the Fed can determine only the money supply. d. matters to banks that borrow and lend federal funds but does not influence aggregate demand.

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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985
BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985

Solutions

Chapter
Section
Chapter 16, Problem 3CQQ
Textbook Problem

The Federal Reserve’s target rate for the federal funds rate

a. is an extra policy tool for the central bank, in addition to and independent of the money supply.

b. commits the Fed to set a particular money supply so that it hits the announced target.

c. is a goal that is rarely achieved, because the Fed can determine only the money supply.

d. matters to banks that borrow and lend federal funds but does not influence aggregate demand.

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