The FE Line Would Be Shifted to the Right by

question 7

Multiple Choice

The FE line would be shifted to the right by

• A)a decline in the productivity of labor.
• B)a decline in the productivity of capital.
• C)an increase in the productivity of labor.
• D)a decline in the real interest rate.

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Definitions:

Depository Institutions

Depository institutions are financial organizations, such as banks and credit unions, that accept deposits from individuals and provide loans.

Reserves

Funds that banks use to satisfy the cash demands of their customers and the reserve requirements of the Fed; reserves consist of cash held by banks plus deposits at the Fed.

Acquire Funds

The process of obtaining capital or money to finance operations, investments, or other business activities.

Foreign Exchange Markets

Markets involving the trading of currencies worldwide which facilitate currency conversion for international transactions and investments.