1) If the central bank targets a monetary aggregate, it is likely to lose control over the interest rate because
A) of fluctuations in the demand for reserves.
B) of fluctuations in the consumption function.
C) bond values will tend to remain stable.
D) of fluctuations in the business cycle.
2) If the Fed pursues a strategy of targeting an interest rate when fluctuations in money demand are prevalent,
A) fluctuations of nonborrowed reserves will be small.
B) fluctuations of nonborrowed reserves will be large.
C) the Fed will probably quickly abandon this policy, as it did in the 1960s.
D) the Fed will probably quickly abandon this policy, as it did in the 1950s.
3) Fluctuations in the demand for reserves cause the Fed to lose control over a monetary aggregate if the Fed targets
A) a monetary aggregate.
B) the monetary base.
C) an interest rate.
D) nominal GDP.
4) Interest rates are difficult to measure because
A) data on them are not available in a timely manner.
B) real interest rates depend on the hard to determine expected inflation rate.
C) they fluctuate too often to be accurate.
D) they cannot be controlled by the Fed.