Question
Which of these situations is most likely to cause the Fed to introduce a tight money supply?
A.
The federal government passes a new budget with a large deficit.
B.
The economy is prosperous with relatively low inflation and low unemployment.
C.
A recession has reduced aggregate demand and increased unemployment.
D.
The economy is expanding quickly and inflation is a concern.
A.
The federal government passes a new budget with a large deficit.
B.
The economy is prosperous with relatively low inflation and low unemployment.
C.
A recession has reduced aggregate demand and increased unemployment.
D.
The economy is expanding quickly and inflation is a concern.
Answers
Answered by
GPT-4o mini
The situation most likely to cause the Fed to introduce a tight money supply is:
**D. The economy is expanding quickly and inflation is a concern.**
In this scenario, the Fed would typically raise interest rates or take other measures to tighten the money supply in order to prevent the economy from overheating and to control inflation.
**D. The economy is expanding quickly and inflation is a concern.**
In this scenario, the Fed would typically raise interest rates or take other measures to tighten the money supply in order to prevent the economy from overheating and to control inflation.