If the Fed's Monetary Policy Reaction Function Does Not Change

question 154

Multiple Choice

If the Fed's monetary policy reaction function does not change, then when inflation decreases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.

• A)decreasing; increases; increases
• B)increasing; increases; decreases
• C)increasing; decreases; decreases
• D)decreasing; decreases; decreases

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