What Is the Major Cost of Slowing Down an Ongoing

question 87

Multiple Choice

What is the major cost of slowing down an ongoing inflation?

• A) Output must rise above potential.
• B) The Fed must sell bonds at lower prices than those at which the bonds were purchased.
• C) Output must fall below potential.
• D) The Fed must purchase bonds from the public.
• E) The Fed must lend additional money to member banks at below-market interest rates.

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