The Fed adjusts the interest Rates - Why the Fed talks rates
3 important questions on The Fed adjusts the interest Rates - Why the Fed talks rates
Why can’t the Fed fix both money supply and interest rate simultaneously?
The Fed must choose to either target the interest rate or fix the money supply.
How does the Fed target the interest rate?
The Fed announces a desired interest rate, and money supply adjusts automatically.
What happens when the Fed fixes the money supply?
The quantity of money is set, allowing the market to determine interest rates.
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