Assume the recovery process of the 2020 depressed economy is expected to start after ending the Covid-19 crisis presumably late Fall of 2022. Under the conditions in short term financial market crisis and rising inflation rate in 2022, the Fed has tightened its massive easy lending program April and May, 2022. In addition, the Fed has raised the short term interest rate (the federal fund rate) three times already with a total of 0.75% basis points. Q23: From your knowledge on this topic from this course learning, how this tightening of expansionary money supply policy (reversing the expansionary policy they took during Covid-19 pandemic) to control the rising inflation is expected to affect the macroeconomics may cause uncertainty in the financial market from possible meltdown like 2008 financial crisis O Decrease in such a massive liquidity in financial sector during economic recovery from Covid-19 may cause recession before the decline of inflation. O Reduce the bank reserve and thus lower the liquidity position of banks' to lend to their clients
O All of the above are possible expected results from this monetary policy action