A Requirement of a Good Operating Target Is That the Fed

Multiple Choice

A requirement of a good operating target is that the Fed can exert substantial control over its level and changes. If the rate were to rise above the level that the Fed thought conducive to economic growth and high employment, the Fed would ________.

A) engage in open market purchases and not inject reserves into the banking system.
B) engage in open market purchases and inject reserves into the banking system.
C) not engage in open market purchases but would inject reserves into the banking system.
D) neither engage in open market purchases nor inject reserves into the banking system.