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The Combined Efforts of the Fed and the Treasury in Response

Question 119

Multiple Choice

The combined efforts of the Fed and the Treasury in response to the financial crisis following the housing market crash were:


A) effective in restoring aggregate supply to its pre-crisis level, but still left the economy with sluggish aggregate demand.
B) ineffective in restoring aggregate supply to its pre-crisis level, and output remained far below potential.
C) effective in restoring aggregate supply to its pre-crisis level, but left the economy facing severely increasing inflation.
D) ineffective in restoring aggregate supply to its pre-crisis level, but output increased due to increased consumer confidence boosting aggregate demand.

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