The problem faced by the Fed stems from two of the Ten Principles of Economics.Those principles are as follows:
A) (1)Governments can usually improve market outcomes,and (2)society faces a short-run trade-off between inflation and unemployment.
B) (1)Governments can sometimes improve market outcomes,and (2)interest rates fall when the government prints too much money.
C) (1)Society faces a short-run trade-off between inflation and unemployment,and (2)prices rise when the government prints too much money.
D) (1)Society faces a long-run trade-off between inflation and unemployment,and (2)prices rise when the government prints too much money.

Question

Quizplus · Accepted Answer

The problem faced by the Fed is related to the two principles mentioned in choice C. Specifically, the Fed is facing a trade-off between inflation and unemployment as it tries to stimulate the economy through low interest rates and expansionary monetary policy. However, printing too much money can lead to higher prices (inflation), which can harm the economy in the longer term.

The Problem Faced by the Fed Stems from Two of the Ten