Final answer:
The Federal Reserve is likely to rely on the inflation rate as an intermediate target, given its goal of price stability and historical policy focus on managing the rate of inflation.
Step-by-step explanation:
The Federal Reserve (the Fed) may rely on several macroeconomic variables as intermediate targets in its monetary policy. While the Fed is concerned with various aspects of the economy, the options provided specifically list unemployment rate, nominal GDP, inflation rate, and exchange rates. Among these, the Fed often aims for price stability as a primary goal, which entails targeting the inflation rate. Past Federal Reserve policies have shown a focus on maintaining an inflation rate target (for example, a 2% inflation rate) and adjusting monetary policies to achieve that level. Therefore, out of the given choices, the most likely intermediate target the Fed would rely on is C. Inflation rate.
The Fed might rely on inflation rate as an intermediate target. Inflation rate refers to the general increase in prices of goods and services over time. By monitoring and targeting inflation, the Fed can make adjustments in monetary policy to maintain price stability and control inflationary pressures.