Which of the following situations is one in which the Fed will potentially pursu

Question

Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy? A. Potential GDP is forecasted to be higher then equilibrium GDP. B. Aggregate demand is growing too fast to keep the economy at full employment. C. Potential GDP is forecasted to be lower than equilibrium GDP. D. Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment. Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy? A. Potential GDP is forecasted to be higher then equilibrium GDP. B. Aggregate demand is growing too fast to keep the economy at full employment. C. Potential GDP is forecasted to be lower than equilibrium GDP. D. Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment. A. Potential GDP is forecasted to be higher then equilibrium GDP. B. Aggregate demand is growing too fast to keep the economy at full employment. C. Potential GDP is forecasted to be lower than equilibrium GDP. D. Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.

Explanation / Answer

The one in which the Fed will potentially pursue expansionary monetary policy is aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment. This shows low per capita income of the citizens. This happens due to declining employment rate as well. There must be proper check and surveys conducted for the welfare of the citizens of the States.

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