ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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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

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