An explanation for the low federal funds rate in 2003 was:
A) a fear of deflation.
B) falling unemployment.
C) rising inflation.
D) the decline of the dollar vis-à-vis the euro.
E) an attempt to boost house sales.

Question

Quizplus · Accepted Answer

The low federal funds rate in 2003 was due to a fear of deflation, which occurs when prices for goods and services drop too low and can lead to a recession. The Federal Reserve used a low interest rate to stimulate borrowing and spending, which would help offset the potential deflationary pressures.

An Explanation for the Low Federal Funds Rate in 2003