If the Fed Believes That Real GDP Is Above Potential

question 157

Multiple Choice

If the Fed believes that real GDP is above potential GDP, it will

• A)raise interest rates to shift the AD curve to the left and the IA line downward.
• B)raise interest rates to shift the IA line downward.
• C)raise interest rates to shift the AD curve to the left.
• D)lower interest rates to shift the IA line downward.
• E)lower interest rates to shift the AD curve to the left.

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Definitions:

Biological Makeup

The genetic and physiological characteristics that define an organism, including its cellular, structural, and functional attributes.

Surrounding Culture

The set of shared attitudes, values, goals, and practices that characterizes an institution, organization, or group, or the broader context of an individual's environment.

Basic Tastes

The fundamental groups of taste sensations that humans can detect, traditionally identified as sweet, sour, salty, bitter, and umami.

Umami

One of the five basic tastes, described as savory or meaty, due to the presence of glutamate.