Since 2002, the Fed Has Shifted to Expansionary Monetary Policy

question 44

Multiple Choice

Since 2002, the Fed has shifted to expansionary monetary policy, then to restrictive policy, and then back to expansionary monetary policy. Policy shifts of this type are most likely to

• A) promote economic stability and stimulate employment.
• B) keep the general level of prices relatively stable because the periods of restrictive policy will just offset the periods of expansion.
• C) help promote economic stability because changes in monetary policy can be counted on to exert a predictable impact on the economy quickly.
• D) promote instability because the time lags of monetary policy are long and variable.

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