In the 1970's the Federal Reserve Responded to an Adverse

question 7

Multiple Choice

In the 1970's the Federal Reserve responded to an adverse supply shock.Its policy made

• A)the recession that followed smaller and so provided a more favorable tradeoff between inflation and unemployment.
• B)the recession that followed smaller,but in doing so produced a less favorable tradeoff between inflation and unemployment.
• C)the recession that followed larger,but in doing so provided a more favorable tradeoff between inflation and unemployment.
• D)the recession that followed larger and also produced a less favorable tradeoff between inflation and unemployment.