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If the demand for reserves did not fluctuate, the Fed could pursue both a reserves target...

If the demand for reserves did not fluctuate, the Fed could pursue both a reserves target and an interest-rate target at the same time. Is this statement true, false, or uncertain? Explain.

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Answer #1

Solution:-Given statement is True.

Explaination:-Here given statement is absolutely true why because If the demand for reserves did not fluctuate, the Fed could pursue both a reserves target and an interest-rate target at the same time.In such a world, hitting a reserves target would mean that the Fed would also hit its interest-rate target, or vice versa. Thus, the Fed could pursue both a reserves target and an interest-rate target at the same time, but only if there were no variation in reserve demand.

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