When the Fed Purchases Additional Securities and Shifts to a More

question 53

Multiple Choice

When the Fed purchases additional securities and shifts to a more expansionary monetary policy,

• A) the inflation rate will rise almost immediately.
• B) the growth of output and employment will increase quickly.
• C) several months will typically pass before the shift in policy exerts much impact on output and employment.
• D) this policy will eventually lead to a decline in the general level  of prices if it is continued for a prolonged period of time.

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