In Response to a Severe Recession, the Fed More Than

Multiple Choice

In response to a severe recession, the Fed more than doubled the monetary base and pushed short-term interest rates to near zero during 2009-2010.  What happened in 2011?

A) The inflation rate soared to double-digit levels.
B) Aggregate demand increased and the economy recovered rapidly.
C) The large budget deficit of the earlier years was transformed into a budget surplus.
D) The high rate of unemployment continued.