ʺAs the Fed Chases Inflation, Critics Shout, ʹFaster!ʹ

question 125

Multiple Choice

ʺAs the Fed Chases Inflation, Critics Shout, ʹFaster!ʹ
ʺFor weeks, the Fed has broadcast its intention to raise interest rates glacially.ʺ The Fed was moving slowly, according to an economist because ʺ... the declining price of oil, economic fundamentals, including productivity and global competition, will keep inflation in check.ʺ The Fed, recognizing that the economy was improving stated it planned to ʺrespond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.ʺ Other economists disagree with the Fedʹs restrained policy as a ʺmistakeʺ
Www.nytimes, 7/1/2004
The Fedʹs policy will the quantity of money and the supply of loanable funds.

• A) decrease; decrease
• B) decrease; increase
• C) increase; decrease
• D) increase; increase

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