Suppose the economy is in a recession and the Fed lowers the federal funds rate. Then
A. real GDP and the price level will both decrease.
B. real GDP will increase and the price level will decrease.
C. real GDP will decrease and the price level will increase.
D. real GDP and the price level will both increase.
Answer:D
Suppose the economy is in a recession and the Fed lowers the federal funds rate. Then
A. real GDP and the price level will both decrease. B. real GDP will increase and the price level will decrease. C. real GDP will decrease and the price level will increase. D. real GDP and the price level will both increase.