Which is an issue that makes central banking difficult for the Federal Reserve Bank (the Fed) ?

A) The Fed does not control the money supply, so it is hapless in the face of Congress, who does control the money supply. So even when the Fed has many ideas for the betterment of the economy, Congress sometimes makes bad economic decisions.

B) There is a lag between when policies are enacted and when the effects of those policies can be seen.

C) Because inflation is unacceptable due to the increased price levels throughout the economy, the Fed can only lower the money supply, not raise it.

D) All of these make central banking difficult. Central banking is a relatively easy task, so none of these make it difficult.

Question

Business

Linda Elliott

24 September, 15:57

Which is an issue that makes central banking difficult for the Federal Reserve Bank (the Fed) ?

A) The Fed does not control the money supply, so it is hapless in the face of Congress, who does control the money supply. So even when the Fed has many ideas for the betterment of the economy, Congress sometimes makes bad economic decisions.

B) There is a lag between when policies are enacted and when the effects of those policies can be seen.

C) Because inflation is unacceptable due to the increased price levels throughout the economy, the Fed can only lower the money supply, not raise it.

D) All of these make central banking difficult. Central banking is a relatively easy task, so none of these make it difficult.

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Answers (1)

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Barrett Mccann · Answer 1

B) There is a lag between when policies are enacted and when the effects of those policies can be seen.

Explanation:

The issue that makes the central banking difficult for the Federal Reserve Bank -

The issue that makes central banking difficult, because if the lag between these two period is very large then we cannot determine whether the policy is working or not.

And other two are incorrect because money supply is controlled by the Fed, and it can increase and decreases the money supply.