When the AD Curve Is Relatively Flat, the Fed

question 21

Multiple Choice

When the AD curve is relatively flat, the Fed

• A) is only willing to accept small changes in output to keep the price level stable.
• B) is willing to accept large changes in the price level to keep output stable.
• C) is not willing to accept any changes in output to keep the price level stable.
• D) is willing to accept large changes in output to keep the price level stable.

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Definitions:

Negotiable Instrument

A textual document that pledges the payment of an exact monetary amount, to be made either when asked or at a predetermined time, and it specifies who will make the payment.

Sum Certain

A legal term referring to a specified or fixed amount of money.

Unconditional Promise

A pledge or guarantee that is absolute and not subject to any conditions or contingencies.

Bearer Instruments

Bearer instruments are financial documents that entitle the holder or bearer of the document to the rights or property stated in the document, without requiring proof of ownership.