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Explain why the FED cannot set intermediate targets in terms of both monetary aggregates and interest rates?
Wiki User
∙ 14y ago
Monetary aggregate is a goal of money supply. Interest rate is a goal of a constant rate. To hold a specific money supply the interest rate would fluctuate. To hold a specific interest rate the money supply would fluctuate. So they can not work together.
Check this out and read 11.2 through 11.4
http://www.pitt.edu/~jduffy/econ280/lec1213.pdf
Wiki User
∙ 14y ago
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