When the Fed Raises Interest Rates, It Expects

question 204

Multiple Choice

When the Fed raises interest rates, it expects

• A)a decrease in potential GDP.
• B)a decrease in the growth rate of real GDP.
• C)an increase in the growth rate of real GDP.
• D)an increase in potential GDP.
• E)no change in either potential or real GDP.

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Definitions:

Justifies Act

A rationale or reason given for taking a specific action, often framed in moral, logical, or practical terms.

Compromise Mechanism

A psychological strategy where conflicting demands are met by finding a middle ground or mutual concession, thus reducing internal tension.

Rationalization

A defense mechanism where controversial behaviors or feelings are justified and explained in a seemingly rational or logical manner to avoid the true explanation.

Bogus Reasons

False, misleading, or unfounded reasons provided to justify a decision or action.