In Which of the Following Situations Would the Fed Conduct

question 88

Multiple Choice

In which of the following situations would the Fed conduct contractionary monetary policy?

• A)The Fed believes that aggregate demand was growing too slowly to keep up with potential GDP.
• B)The Fed fears that unemployment is climbing above the natural rate.
• C)The Fed is concerned that aggregate demand would continue to exceed the growth in potential GDP.
• D)The Fed is worried that deflation will become a problem.

---

Definitions:

Regulatory Controls

Measures and interventions implemented by a governing body to regulate activities within a specific area or industry to ensure safety, compliance, and fairness.

Illegal Acts

Actions or activities that violate the laws or regulations of a particular jurisdiction, subjecting the perpetrator to legal penalties.

Lobbying

Expresses opinions and preferences to government officials.

Personal Contacts and Networks

Connections and relationships with individuals for professional or personal gain.