In the long run, if the Fed decreases the rate at which it increases the money supply,
A)inflation will be lower.
B)unemployment will be higher.
C)real GDP will be lower.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When the Fed decreases the rate at which it increases the money supply, it essentially limits the amount of money available in the market. This implies that individuals and businesses have less money to spend, meaning there is less demand for goods and services in the economy. In the long term, this tends to put downward pressure on prices, leading to lower inflation rates. Therefore, the correct choice is A).

In the Long Run, If the Fed Decreases the Rate