When Financial Market Analysts Say That the Fed Is "Trying

Multiple Choice

When financial market analysts say that the Fed is "trying to cool off the economy," they are referring to the case in which the Fed

A) raises the target rate of inflation.
B) lowers the target rate of inflation.
C) raises the federal funds rate because aggregate demand is greater than potential GDP at the target rate of inflation.
D) raises the federal funds rate because aggregate demand is less than potential GDP at the target rate of inflation.
E) lowers the federal funds rate because aggregate demand is less than potential at the target rate of inflation.