Which of the Following Situations Is One in Which the Fed

Multiple Choice

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 than equilibrium GDP.
B) Potential GDP is forecasted to be lower than equilibrium GDP.
C) Aggregate demand is growing too fast to keep the economy at full employment.
D) Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.