The fed's two possible monetary policy instruments are the federal funds rate and the fed uses directly control or closely target.
Monetary policy
A monetary policy, also known as fiscal policy in economics, can be defined as the use of taxation and spending by the government to affect the macroeconomic conditions of a nation, such as combined demand (AD), employment inside a nation, Inflation.
Due to lags in monetary policy, the Federal Reserve System (Fed) should ideally attempt to predict changes in the American economy before they occur. The Federal Reserve is in charge of establishing monetary policy thanks to the Federal Reserve Act of 1913. Open market operations, the discount rate, and reserve requirements are all within the Federal Reserve's jurisdiction.
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