In the case of recession, a detrimental effect of pressure on the Fed that causes it to act immediately is that it could possibly
A)add to the probabilities of a policy promoting economic growth.
B)improve the data for the Fed.
C)lead to inflation later.
D)increase the likelihood of stability.

Question

Quizplus · Accepted Answer

If the Fed acts too hastily in response to pressure during a recession, it could potentially increase the money supply and interest rates too quickly, leading to inflationary pressures down the line. This would ultimately harm the economy in the long run.

In the Case of Recession, a Detrimental Effect of Pressure