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.

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