Fiscal policy is the use of taxes and spending by the government to affect aggregate demand

The Federal Reserve fears that the United States economy is growing too slowly and is stuck in a recession. To move the economy back to its potential GDP, the most likely policy action for the Fed is to ________ the federal funds and thus ________

A) raise; increase aggregate demand B) raise; decrease aggregate demand C) lower; increase aggregate supply D) lower; decrease aggregate supply E) lower; increase aggregate demand

The ________ nature of consumer durables expenditures ________ a significant drop in the personal-saving-and-consumer-durables-expenditure ratio in a recession

A) procyclical, helps produce B) procyclical, prevents C) countercyclical, helps produce D) countercyclical, prevents