Describe the two problems that limit the precision

Reference no: EM133711181

Question: During lectures on the monetary system, you understood that central banks or the Fed relies on various policy tools including open-market operations, bank lending, reserve requirements and interests on reserves to control the money supply. However, the central bank's control of money is not precise and is limited by two main problems. Please describe the two problems that limit the precision of the Fed's (Central Banks) control of the money supply and explain how each limits that control.

Reference no: EM133711181

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