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Sofiane Filouane
on Nov 11, 2024

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If the short-run equilibrium output of the United States exceeds the potential output,the Fed:

A) employs an active monetary policy to close a recessionary gap.
B) employs an active monetary policy to close an expansionary gap.
C) relies on a passive approach to close a recessionary gap.
D) relies on a passive approach to close an expansionary gap.
E) employs an expansionary fiscal policy.

Active Monetary Policy

Active monetary policy involves deliberate actions by a central bank to influence the economy's monetary supply and interest rates, aiming to achieve specific macroeconomic objectives.

Passive Approach

A strategy characterized by minimal or no intervention, often used in investment or management contexts.

Expansionary Gap

A situation where actual output in an economy exceeds the potential output, typically leading to inflation.

  • Distinguish between passive and active economic policy strategies.
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KM
khilesh meshramNov 12, 2024
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