Findings by various researchers have shown that
A)the money supply declines almost immediately in response to a contractionary policy by the Fed and that output declines with a lag of between six months and one year.
B)the money supply declines with a lag of between six months and one year in response to a contractionary policy by the Fed and output declines almost immediately.
C)the money supply and output decline almost immediately in response to a contractionary policy by the Fed.
D)the money supply and output decline with a lag of between six months and one year to a contractionary policy by the Fed.

Question

Quizplus · Accepted Answer

The question is asking about the effects of a contractionary policy by the Fed on the money supply and output. Option A correctly states that the money supply declines almost immediately in response to the policy, while output declines with a lag of between six months and one year. This is supported by research findings. Thus, option A is the best choice.

Findings by Various Researchers Have Shown That