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Which of the following is not an "intermediate" target used by the Fed in implementing monetary...

Which of the following is not an "intermediate" target used by the Fed in implementing monetary policy (a) gold prices (b) real long term interest rates (c) growth in consumer debt (d) federal funds rate

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Answer #1

The Federal Reserve Board of Governors and the FOMC are the prime decision maker for U.S. monetary policy. They decide whether to expand money supply to increase economic activity or to or to decrease money supply to decrease inflation. The Fed has three major methods by which to control the supply of money: it can engage in open market operation, change reserve requirement, or change its discount rate. The intemediate target used by Fed is the variables that are not in direct controll of Fed but the authorities can manipulate their values by changing the variables that they have direct control in.

Thus the correct option is: (d) federal funds rate

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