Question

The Federal Reserve engages in another round of quantitative easing. What are the effects of this policy on the economy?(1 point)ResponsesThe rate of inflation decreases as the money supply increases, which causes an increase in consumer spending, employment, and economic growth.The rate of inflation decreases as the money supply increases, which causes an increase in consumer spending, employment, and economic growth.Banks do not have as much funds to issue loans to consumers and businesses, which decreases consumer and business spending, and slows economic growth.Banks do not have as much funds to issue loans to consumers and businesses, which decreases consumer and business spending, and slows economic growth.Banks have more funds to issue loans to consumers and businesses, which increases consumer and business spending, employment, and economic growth.Banks have more funds to issue loans to consumers and businesses, which increases consumer and business spending, employment, and economic growth.The rate of inflation decreases as the money supply decreases, which slows economic growth and increases unemployment.

Answer 1

The rate of inflation increases as the money supply decreases, which slows economic growth and increases unemployment.