QuestionMay 24, 2025

Read each question and choose the best answer. What is a major concern about Fed policies that lower interest rates and increase lending? A. They might lead to budget surpluses. B. They might force banks to call in loans. C. They might crowd out foreign investment. D. They might produce growing inflation.

Read each question and choose the best answer. What is a major concern about Fed policies that lower interest rates and increase lending? A. They might lead to budget surpluses. B. They might force banks to call in loans. C. They might crowd out foreign investment. D. They might produce growing inflation.
Read each question and choose the best answer. What is a major concern about Fed policies that lower interest rates and increase lending? A. They might lead to budget surpluses. B. They might force banks to call in loans. C. They might crowd out foreign investment. D. They might produce growing inflation.

Solution
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Answer

D. They might produce growing inflation. Explanation 1. Identify the effect of lower interest rates Lower interest rates generally increase borrowing and spending. 2. Determine potential economic impact Increased borrowing can lead to higher demand for goods and services. 3. Connect increased demand to inflation Higher demand often results in price increases, leading to inflation.

Explanation

1. Identify the effect of lower interest rates<br /> Lower interest rates generally increase borrowing and spending.<br />2. Determine potential economic impact<br /> Increased borrowing can lead to higher demand for goods and services.<br />3. Connect increased demand to inflation<br /> Higher demand often results in price increases, leading to inflation.
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