The Fed
A)can easily distinguish the minor ups and downs of the economy from a recession.
B)can have difficulty distinguishing the minor ups and downs of the economy from a recession.
C)always times its policy responses correctly.
D)can easily determine if a drop in production means a recession is inevitable.

Question

Quizplus · Accepted Answer

The Fed can have difficulty distinguishing the minor ups and downs of the economy from a recession because there are no precise indicators that can tell whether an economy is entering or exiting a recession. It requires a careful analysis of various economic indicators over a period of time to make such a determination.