Chapter13: Monetary Policy
Section: Chapter Questions
Problem 7E
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Question
Why does the Fed not target the quantity of money?
The Fed does not target the quantity of money because _______.
the Fed believes that it does not have enough control over the quantity of money because it is the banks that determine the quantity of loans and deposits
the Fed believes that the quantity of money should remain constant
Congress has passed laws that disallow this action by the Fed
the Fed believes that if it changed the demand for money, the interest rate would fall and the growth of aggregate demand would slow down
the Fed believes that the demand for money is too unstable
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