If the Fed Wants to Permanently Lower Interest Rates,then It

question 147

Multiple Choice

If the Fed wants to permanently lower interest rates,then it should raise the rate of money growth if

• A)there is fast adjustment of expected inflation.
• B)there is slow adjustment of expected inflation.
• C)the liquidity effect is smaller than the expected inflation effect.
• D)the liquidity effect is larger than the other effects.

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Definitions:

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