choose the statement that is incorrect: the fed’s open market operations determine the supply of reserves B.

choose the statement that is incorrect:

A. the fed’s open market operations determine the supply of reserves

B. The Fed uses open market operations to make the quantity of reserves supplied equal the quantity of federal funds

C. as the federal funds rate rises, the quantity of reserves supplied increases

D. The federal funds rate is the opportunity cost of holding reserces

Suppose the Fed uses the Taylor rule to set the federal funds rate.

The inflation rate is 3 percent a year and the output gap is zero percent.

What is the federal funds rate set​ at, according to the Taylor​ rule?

The federal funds rate is set at ____________ percent a year.

Choose the correct statements.

a. The Fed choice of monetary policy instrument is a short-term interest rate

b. The Fed normally changes the federal funds rate by only a quarter of a percentage point at a time

c. The Fed has preset views about the exchange rate and frequently participates in the foreign exchange market to move the exchange rate closer to its target.

 
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