Multiple Choice
Consumer confidence in the economy falls, and as a result, aggregate demand decreases.As real GDP falls below potential GDP, if the Fed followed Friedman's k-percent rule, the Fed would
A) increase the quantity of money more than usual.
B) increase government expenditures.
C) continue allowing the quantity of money to grow at "k" percent.
D) lower the federal funds rate.
E) raise the federal funds rate.
Correct Answer:
Verified
Correct Answer:
Verified
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