Suppose the Fed Is Targeting Real GDP

question 138

Multiple Choice

Suppose the Fed is targeting real GDP.If the interest rate is below its forecast and the Fed is convinced that this is due to commodity demand instability,it will ________ the money supply,which turns out to be exactly the wrong thing to do if the low interest rate is in fact due to ________ money demand.

• A)raise,high
• B)raise,low
• C)lower,high
• D)lower,low