The increase of the real money supply by 10% by the Federal Reserve when the unemployment rate rises by 1% is an example of
A)the conduct of procyclical monetary policy.
B)the utilization of feedback policy rule.
C)the utilization of rigid policy rule.
D)the conduct of nondiscretionary fiscal policy.

Question

Quizplus · Accepted Answer

The increase in real money supply by the Federal Reserve in response to the rise in unemployment rate is an example of the utilization of feedback policy rule. This policy rule suggests that the central bank should adjust its policy instruments, such as money supply or interest rates, based on the current economic conditions. In this case, the Fed is increasing the money supply to stimulate economic activity and reduce unemployment. This is a countercyclical policy, aimed at reducing the negative impact of economic downturns.

The Increase of the Real Money Supply by 10% by the Federal