Figure 14-6
-In the situation shown in Figure 14-6, how could the Fed return the economy to potential output?

Name: Figure 14-6 -In the situation shown in Figure 14-6, how could the Fed return the economy to potential output?
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Question

Figure 14-6 
-In the situation shown in Figure 14-6, how could the Fed return the economy to potential output?

Quizplus · Accepted Answer

The Fed can return the economy to potential output by shifting to a more restrictive monetary policy. This will reduce the money supply and increase interest rates, which will slow down economic growth and bring it back to potential.

Figure 14-6 -In the Situation Shown in Figure 14-6, How Could the How