When hit with a real negative economic shock, the Fed must make its policy choice between

Question

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When hit with a real negative economic shock, the Fed must choose between low growth rate and high inflation rate to minimize the negative impact on the economy. A low growth rate can result in high unemployment rates, while a high inflation rate can lead to a decrease in the purchasing power of consumers and an increase in the cost of living, further depressing the economy. Therefore, the Fed must aim for a balance between growth and inflation that avoids both scenarios.

When Hit with a Real Negative Economic Shock, the Fed