If the Federal Reserve raises or lowers interest rates too late,it could result in a ________ policy that destabilizes the economy.

Question

Quizplus · Accepted Answer

A procyclical policy is when the government or central bank takes actions that amplify the economic cycle, exacerbating booms and busts. If the Federal Reserve were to raise or lower interest rates too late in the economic cycle, it could potentially amplify the boom or bust, making the economy even more unstable.

If the Federal Reserve Raises or Lowers Interest Rates Too