Some commentators have argued that the Fed is running a risk with inflation in the future as a result of the recent large-scale asset purchase programs (known as QE). Although inflationary risks in the near term look still remote, their concerns with its potential negative effects on the economy may not be totally groundless. Which of the following may not justify their concerns? a. Ultra loose monetary policy as it has been may eventually lead to higher inflation. b. Lower interest rate may cause a large depreciation of the US dollar, and hence raise import prices and inflation. c. Lower interest rate may lead to asset-price bubble, raising the risk of a major eventual correction and its potential adverse effects on the economy. d. Lower interest rate may raise productivity growth that would eventually spark inflation
Some commentators have argued that the Fed is running a risk with inflation in the future as a
result of the recent large-scale asset purchase programs (known as QE). Although inflationary
risks in the near term look still remote, their concerns with its potential negative effects on the
economy may not be totally groundless. Which of the following may not justify their
concerns?
a. Ultra loose
b. Lower interest rate may cause a large
import prices and inflation.
c. Lower interest rate may lead to asset-
correction and its potential adverse effects on the economy.
d. Lower interest rate may raise productivity growth that would eventually spark inflation
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