If the fed believes the economy is about to fall into recession, it should
a. use a contractionary monetary policy to lower the interest rate and shift ad to the left.
b. use an expansionary monetary policy to lower the interest rate and shift ad to the right.
c. use an expansionary fiscal policy to increase the interest rate and shift ad to the right.
d. use its judgment to do nothing and let the economy make the self adjustment back to potential gdp. if the fed believes the inflation rate is about to increase, it should
a. use a contractionary monetary policy to increase the interest rate and shift ad to the left.
b. use an expansionary monetary policy to lower the interest rate and shift ad to the right.
c. use a contractionary fiscal policy to increase the interest rate and shift ad to the left.
d. use a combination of tax increases and spending cuts to keep the budget balanced. click to select your answer.
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