During 2003 the Federal Reserve Began to Openly Discuss Deflation

question 85

Multiple Choice

During 2003 the Federal Reserve began to openly discuss deflation. Their comments suggested they

• A)were enthusiastic about the possibility.
• B)were neutral about whether deflation would be a good thing.
• C)knew it was something to watch because of the Japanese experience of the 1990s, but did not alter policy significantly to combat it.
• D)knew it would be a disaster, so they immediately cut the target federal funds rate by 5 percentage points to avoid the possibility.

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Definitions:

Triad

A group or set of three related people or things, often used in the context of relationships and social dynamics.

Sentiment Relation

The connection or association between emotions and attitudes towards a particular object, event, or situation, affecting perception and decisions.

Unit Relation

The connection or association between different units or elements within a system or structure.

Balance Theory

A psychological theory suggesting that individuals strive for internal consistency among their beliefs, attitudes, and perceptions, especially in the context of interpersonal relationships.