The Federal Reserve appears to tighten monetary policy after a trough __________ it eases policy after a peak in the business cycle.
A) sooner than
B) after about the same length of time as
C) later than
D) no sooner or later than

Question

Quizplus · Accepted Answer

The Federal Reserve tends to tighten monetary policy sooner than it eases policy after a peak in the business cycle. This is because the Fed aims to prevent inflation from rising too high during the peak of the cycle, and tightening policy helps to cool down the economy before inflation spirals out of control. On the other hand, easing policy after a trough helps to stimulate the economy and promote growth.

The Federal Reserve Appears to Tighten Monetary Policy After a Trough