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An Important Reason Why the Federal Reserve Would Not Want

Question 12

Multiple Choice

An important reason why the Federal Reserve would not want to keep interest rates at 0% forever is that:


A) it limits the ability of the Fed to use expansionary monetary policy when the next recession occurs.
B) it restricts the money supply, making it harder for banks to lend money.
C) it raises the possibility of higher unemployment because lower interest rates slow economic growth.
D) it makes borrowing for homes and major purchases more expensive.

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