In one of his weekly broadcasts, the Federal Reserve Chairman remarked that inflation had begun to tick upward. However, unemployment in the U.S was still quite high and economic growth had slowed. With short-term interest rates close to 0 (zero), the Chair did not visualize that ____________ policy would be able to do anything for the high unemployment problem. He felt that _______ policy would be more useful for bolstering employment, but that would require local and state governments and the federal government to provide tax breaks for corporations?

Question

Quizplus · Accepted Answer

The question is asking about which type of policy the Federal Reserve Chairman believes would be more useful for bolstering employment, and the answer is fiscal policy. Option A is incorrect because it pairs federal policy with state policy, which does not make sense in this context. Option B is incorrect because the question explicitly states that monetary policy (i.e. interest rates) cannot do anything for the high unemployment problem due to already being close to zero. Option D is incorrect because the question asks specifically for the type of policy, not the level of government that would need to provide tax breaks for corporations.

In One of His Weekly Broadcasts, the Federal Reserve Chairman