An Effort by the Fed to Reduce Aggregate Demand May

question 160

Multiple Choice

An effort by the Fed to reduce aggregate demand may be thwarted because

• A) investment could remain the same or increase because of optimistic expectations by businesses about the future of the economy.
• B) investment and interest rates are positively related.
• C) investment could fall because of pessimistic expectations.
• D) taxes may have been increased.

---

Definitions:

Alzheimer Disease

A progressive neurodegenerative disorder characterized by cognitive decline, memory loss, and personality changes.

Habituation

Habituation is the process by which there is a decrease in response to a stimulus after being exposed to it repeatedly over time, indicating a form of learning or adaptation.

Sensitization

The process by which a response to a stimulus becomes amplified over time, leading to an increased reaction to a repeated or similar stimulus.

Mania

Disordered mental state of extreme excitement.