Question

The dilemma faced by the Fed when considering monetary policy is the choice between

a.inflation and interest rates
b.inflation and monetizing debt
c.interest rates and reserve
d.monetizing the debt and interest rates

Answer 1

The dilemma faced by the Fed when considering monetary policy is the choice between interest rates and reserve.

Answer 2

The answer is a. inflation and interest rates.

Step-by-step explanation:

The dilemma facing the FED and all the central banks of the countries is between the interest rate and inflation, if the central bank increases the interest rate less people will be able to access credits in the banks therefore the purchase of products falls and the economy enters a recession, on the contrary, if interest rates fall, many people will be able to access credits and buy many goods generating prices of products to rise and therefore inflation, the central bank must find A balance between both.