Which of the following is true?
A)Sometimes the Fed moves to partly offset or even neutralize the intended effects of fiscal policy changes.
B)If a consensus was reached between fiscal and monetary policy makers, you would not expect contractionary fiscal policy and expansionary monetary policy to be adopted at the same time.
C)If policymakers' timing is off, expansionary monetary policy could cause an inflation problem rather than reducing a high unemployment problem.
D)All of the above are true

Question

Which of the following is true?
A)​Sometimes the Fed moves to partly offset or even neutralize the intended effects of fiscal policy changes.
B)​If a consensus was reached between fiscal and monetary policy makers, you would not expect contractionary fiscal policy and expansionary monetary policy to be adopted at the same time.
C)​If policymakers' timing is off, expansionary monetary policy could cause an inflation problem rather than reducing a high unemployment problem.
D)​All of the above are true

Quizplus · Accepted Answer

All of the given statements are true. The Fed may at times offset or neutralize the desired outcomes of fiscal policy changes. Contractionary fiscal policy and expansionary monetary policy are typically not adopted at the same time, and improper timing of expansionary monetary policy could lead to inflationary pressures.

Which of the Following Is True