Question

According to this chart, what is one result of the federal reserve sharply decreasing the discount rate?
a. deflation occurs as the economy expands
b. deflation occurs as the economy contracts
c. inflation occurs as the economy expands*******
d. inflatioon occurs as the economy contract
Ms. Sue
We can't see the chart.
Reed
Even if I can't see the chart, your answer is probably correct. Conventional economic theory indicates that inflation occurs when interest rates are low and the economy expands. It's not always true, as demonstrated by the last eight years, but that's the expected result.
R
You are correct, it's C, Inflation occurs as the economy expands.