Christina and David Romer identify six independent monetary policy shifts after 1960 in which the Fed
A)increased the money supply when output increased and decreased the money supply when output decreased.
B)announced a contractionary monetary policy to fight inflation, after which output fell.
C)announced a contractionary monetary policy to fight inflation, after which output rose.
D)raised nominal interest rates in order to fight recession, after which the money supply rose.

Question

Quizplus · Accepted Answer

Christina and David Romer's research primarily identifies instances where the Federal Reserve announced a contractionary monetary policy to combat inflation, which typically led to a decrease in output. This aligns with economic theory, where contractionary policies are expected to slow down economic activity, at least in the short term, as the primary goal is to reduce inflation.

Christina and David Romer Identify Six Independent Monetary Policy Shifts