Why Would Policymakers Target a Reduction in GDP Growth by Using

question 15

Multiple Choice

Why would policymakers target a reduction in GDP growth by using contractionary policies?
i.The Fed fights inflation by increasing interest rates,which in turn causes a reduction in employment as a by-product.
ii.Excessive optimistic sentiments about the economy can result in an unsustainable economic expansion.

• A) i) and ii) are both true
• B) i) and ii) are both false
• C) i) is true and ii) is false
• D) i) is false and ii) is true

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