Part 2 (1 point)
Once the Fed had pushed short-term interest rates to zero, it engaged in several rounds of quantitative easing, purchasing of billions of dollars' worth of long-term bonds, which would increase the supply of loanable funds. How was quantitative ea supposed to influence the economy?
Choose one:
O A. Quantitative easing would increase long-term interest rates, decrease investment spending, and decrease aggregate demand.
O B. Quantitative easing would reduce long-term interest rates, stimulate investment spending, and increase long-run aggregate supply.
O C. Quantitative easing would reduce long-term interest rates, stimulate investment spending, and decrease aggregate demand.
O D. Quantitative easing would reduce long-term interest rates, stimulate investment spending, and increase aggregate demand.
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