To eliminate a recessionary gap the Fed typically uses __________ monetary policy,and to eliminate an inflationary gap the Fed typically uses __________ monetary policy.
A) expansionary; expansionary
B) expansionary; contractionary
C) contractionary; contractionary
D) contractionary; expansionary

Question

Quizplus · Accepted Answer

To eliminate a recessionary gap, the Fed uses expansionary monetary policy to stimulate economic growth. To combat an inflationary gap, it employs contractionary monetary policy to cool down the economy.

To Eliminate a Recessionary Gap the Fed Typically Uses __________