If the Fed Wishes to Reduce Aggregate Demand, It Will

question 1

Multiple Choice

If the Fed wishes to reduce aggregate demand, it will conduct an open market

• A) sale which will lower bond prices, lower interest rates, and stimulate investment.
• B) purchase which will lower bond prices, lower interest rates, and discourage investment.
• C) sale which will lower bond prices, raise interest rates, and discourage investment.
• D) purchase which will raise bond prices, lower interest rates, and stimulate investment.

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Definitions:

Demand Characteristics

Cues in an experiment that suggest to participants what behavior is expected, desired, or appropriate, potentially influencing the outcomes.

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation, often tested through scientific method.

Experiment Steps

The sequence of actions or procedures designed to systematically investigate a hypothesis by varying and measuring its effects.

Mean

In statistics, the arithmetic average of a set of values, calculated by adding them together and dividing by the number of values.