If the Fed Does Not Take into Account the Additional

question 250

Multiple Choice

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy.

• A)it is likely to decrease GDP too much and cause a recession
• B)it is likely to decrease GDP too little and inflation will persist
• C)it is likely to increase GDP too much and inflation will persist
• D)it is likely to increase GDP too little and cause a recession