The Fed Pushed Interest Rates to Artificially Low Levels During

question 99

Multiple Choice

The Fed pushed interest rates to artificially low levels during 2002-2004. The Austrian view predicts that this policy will lead to

• A)excessive investment in long-lasting assets like housing that will eventually prove to be unprofitable and result in recession.
• B)an increase in sound investments that will propel future economic growth.
• C)a reduction in the general level of prices that will throw the economy into a recession.
• D)an increase in aggregate demand that will generate sustainable expansion in both real output and employment.

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Definitions:

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