Question

The dramatic collapse in the price of technology stocks in 2001–2003, coupled with a short recession in 2001, caused the Federal Reserve to _____ interest rates to stimulate _____.lower; employmentlower; pricesraise; employmentraise; prices

Answer 1

Lower, employment

Step-by-step explanation:

The short-recession of 2001 was caused by a decline in computer sales, which in turn led to a collapse in the price of the stocks of technology companies.

This caused unemployment to rise up to 6%, way above the natural rate. The Fed then lowered the fed funds rate to fight unemployment, from 5% when the recession hit in March 2001, to 2% in Novemeber 2001, when the recession officially ended.

As unemployment is a lagging indicator, the effects of the monetary policy were only seen in the following years.