During _____, both the demand for money and the rate of inflation tend to fall, which prompts the Fed to increase the money supply, and as a result, interest rates decline.

Question

Quizplus · Accepted Answer

During a recession, both the demand for money and the rate of inflation tend to fall. This prompts the Fed to increase the money supply in order to stimulate economic growth and raise inflation back up to its target level. As a result, interest rates decline.

During _____, Both the Demand for Money and the Rate