Based on the information presented in the video, which of the following is likely to occur as a result of the Fed decreasing the money supply? Check all that apply.Employers will bring on large numbers of new employees.The inflation rate will stop growing or decrease.Consumers will spend less money, causing an economic slowdown.Prices for durable goods will increase dramatically.The unemployment rate may rise.
Answer
A
Employers will bring on large numbers of new employees.
B
The inflation rate will stop growing or decrease.
C
Consumers will spend less money, causing an economic slowdown.
D
Prices for durable goods will increase dramatically.
E
The unemployment rate may rise.
Explanation
When the Fed decreases the money supply, borrowing and spending tend to slow. Lower spending can ease inflation, so the inflation rate may stop rising or decrease, and consumers spending less can contribute to an economic slowdown. If businesses face lower demand, they may hire fewer workers or lay some off, so unemployment may rise.
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