The Federal Reserve chose to target fed funds rate from 1970 to October 1979, and moved...

Transcribed Image Text:

The Federal Reserve chose to target fed funds rate from 1970 to October 1979, and moved to targeting money supply, and moved back to targeting fed funds rates after July 1993. 1) Ceteris paribus, if the Fed was targeting interest rates and money demand increased, what would the Fed likely do? 2) Ceteris paribus, if the Fed was instead targeting the quantity of money supplied and money demand increased, what would the Fed likely do? The Federal Reserve chose to target fed funds rate from 1970 to October 1979, and moved to targeting money supply, and moved back to targeting fed funds rates after July 1993. 1) Ceteris paribus, if the Fed was targeting interest rates and money demand increased, what would the Fed likely do? 2) Ceteris paribus, if the Fed was instead targeting the quantity of money supplied and money demand increased, what would the Fed likely do?

Answer rating: 100% (QA)

1 If the Fed was instead targeting interest rates ... View the full answer