If the COVID-19 recovery continues and inflation starts to rise, what effect would a decision by the Fed to not change the federal funds rate target range have on the U.S. economy?If the Fed decides to leave the federal funds rate target range unchanged, we would expect _______. A.deflation to occur and the unemployment rate to increase B.the recessionary gap to increase C.potential GDP to increase and the full-employment quantity of labor to increase D.inflation to increase and the unemployment rate to decreaseThanks!

Inflation is frequently measured in broad terms, similar as the general rise in prices or the rise…

Answered: If the COVID-19 recovery continues and…

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter13: The Federal Reserve System

Section: Chapter Questions

Problem 11QP

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If the COVID-19 recovery continues and inflation starts to rise, what effect would a decision by the Fed to not change the federal funds rate target range have on the U.S. economy?

If the Fed decides to leave the federal funds rate target range unchanged, we would expect _______.

deflation to occur and the unemployment rate to increase

the recessionary gap to increase

potential GDP to increase and the full-employment quantity of labor to increase

inflation to increase and the unemployment rate to decrease

Thanks!

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