Which of the following statements is true? Answer A. The Federal Reserve does no

Question

Which of the following statements is true? Answer A. The Federal Reserve does not set the Federal funds rate, but it influences it through the use of open market operations. B. The Federal Reserve will set a higher target for the Federal funds rate if pursuing an expansionary monetary policy. C. The Federal Reserve sets the target for the Federal funds rate, and then uses the reserve ratio to push banks toward that target. D. The Federal Reserve sets the Federal funds rate. Which of the following statements is true? The Federal Reserve does not set the Federal funds rate, but it influences it through the use of open market operations. The Federal Reserve will set a higher target for the Federal funds rate if pursuing an expansionary monetary policy. The Federal Reserve sets the target for the Federal funds rate, and then uses the reserve ratio to push banks toward that target. The Federal Reserve sets the Federal funds rate. A. The Federal Reserve does not set the Federal funds rate, but it influences it through the use of open market operations. B. The Federal Reserve will set a higher target for the Federal funds rate if pursuing an expansionary monetary policy. C. The Federal Reserve sets the target for the Federal funds rate, and then uses the reserve ratio to push banks toward that target. D. The Federal Reserve sets the Federal funds rate.

Explanation / Answer

The Federal Reserve will set a higher target for the Federal funds rate if pursuing an expansionary monetary policy. B. The Federal Reserve will set a higher target for the Federal funds rate if pursuing an expansionary monetary policy.

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