Question content area

Part $1$

What procedures can the Fed use to control the federal funds$$ rate?

Part $2$

A$.$

Open market operations.

Your answer is correct.

B$.$

The Taylor rule.

C$.$

Inflation targeting.

D$.$

None of the above are correct.

Part $3$

Why does control of this interest rate imply that the Fed will lose control of nonborrowed$$ reserves?

Part $4$

A$.$

The Fed lacks control over both the nominal and real interest$$ rates, so it cannot control everything.

B$.$

The Fed has to adjust reserves in response to changes in reserve demand to keep interest rates at the target.

C$.$

The Fed has to change the amount of discount loans it makes when it sets an$$ interest$-$rate target.

D$.$

All of the above are correct.