One problem with using monetary policy to address "bubbles" in asset markets is that:

A. reducing the real interest rate to deal with the bubble could lead to inflation.
B. the Federal Reserve is better than financial-market professionals at identifying bubbles.
C. monetary policy is not a very good tool for addressing the problem of inappropriately high asset prices.
D. the Federal Reserve is not interested in stabilizing output.


Answer: C

Economics

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