A key reason that FOMC members expected that their target for the federal funds rate in 2016 would be higher than it actually was is that they had expected the growth rate of real GDP to be ________ and the inflation rate to be ________ than they actually were.
A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower

Question

Quizplus · Accepted Answer

FOMC members expected the target for the federal funds rate to be higher because they anticipated higher growth in real GDP and higher inflation than what actually occurred. Higher expected growth and inflation typically lead to expectations of higher interest rates to manage economic expansion and control inflation.

A Key Reason That FOMC Members Expected That Their Target