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Why Does the Fed Have Imperfect Control Over the Money

Question 168

Multiple Choice

Why does the Fed have imperfect control over the money supply?


A) Because the Fed does not know how much reserves will change when it buys or sells securities.
B) Because of unpredictable changes in the public's desire to hold cash and banks' desires to hold reserves.
C) Because of unpredictable changes in reserve requirements.
D) Because of the secrecy of FOMC meetings, which lead to policy surprises.

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