If the current unemployment rate is 5%, under which of the following circumstances would you expect the Fed to use contractionary monetary policy?
A) if the inflation rate is above 5%
B) if the inflation rate is below 5%
C) if the natural rate of unemployment is below 5%
D) if the natural rate of unemployment is above 5%
D
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What actions could the Federal Reserve take to achieve consistent growth in real GDP at 4 percent per year?
A) The Fed could follow contractionary monetary policy that would reduce the federal funds rate to zero so investment will rise consistently. B) The Fed could maintain a growth rate of the money supply of 4 percent, regardless of whether inflation was rising or falling in the economy. C) The Fed has no direct control over real GDP in the long run, so there are no actions it could take to achieve that goal. D) The Fed could increase the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
Recent U.S. budget deficits have arguably been financed by foreigners; if it were not for foreign __________ of Treasury securities, U.S. interest rate would be much __________
A) sales; higher B) sales; lower C) purchases; higher D) purchases; lower