In the best case scenario, what is the Fed's response to a negative demand shock?
A. The Fed will decrease the growth rate of the money supply to offset the negative demand shock.
B. The Fed will increase the growth rate of the money supply to offset the negative demand shock.
C. The Fed will increase government spending to offset the negative demand shock.
D. The Fed will decrease government spending to offset the negative demand shock.
Ans: B. The Fed will increase the growth rate of the money supply to offset the negative demand shock.
You might also like to view...
Standards set to control air toxics in the United States
a. are known as the NAAQS b. are the same as those set for greenhouse gases c. are intended to attain the maximum reduction for each toxic achievable, known as MACT d. are solely benefit-based
Firm 1 and firm 2 compete as a Cournot oligopoly. There is an increase in marginal cost for firm 1. Which of the following is NOT true?
A. Firm 1 will produce less. B. Both firm 1's and firm 2's reaction functions are shifted. C. Firm 2 will produce more. D. Profits of firm 1 will decrease.