The Fed lowered interest rates in 2001 and 2002.This implies,other things the same,that the Fed
A)increased the money supply because it was concerned about unemployment.
B)increased the money supply because it was concerned about inflation.
C)decreased the money supply because it was concerned about unemployment.
D)decreased the money supply because it was concerned about inflation.

Question

Quizplus · Accepted Answer

Lowering interest rates is a common tool used by the Federal Reserve to increase the money supply in the economy. By lowering interest rates, banks are encouraged to lend more money, which in turn stimulates economic activity and helps reduce unemployment. In 2001 and 2002, the Federal Reserve lowered interest rates in response to a slowing economy and concerns about rising unemployment.

The Fed Lowered Interest Rates in 2001 and 2002