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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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Principles of Macroeconomics (Mind...

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781285165912
BuyFind

Principles of Macroeconomics (Mind...

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781285165912

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Chapter
Section
Chapter 21, Problem 3QCMC
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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