What Is a Reason It Might Be Hard for the Fed

question 199

Multiple Choice

What is a reason it might be hard for the Fed to restore aggregate demand in the face of a negative demand shock?

• A) The Fed might run out of money.
• B) Banks usually don't do what the Fed demands of them.
• C) The Fed must operate in real time,when a lot of the data about the state of the economy are unknown.
• D) The economy responds to the Fed's actions with no lag.