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.

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Definitions:

Mole

The atomic mass of an element or the molecular mass of a compound, expressed in grams; one mole of any substance has 6.02 x 10^23 units (Avogadro’s number).

Covalent Bonds

Chemical bonds formed by the sharing of electron pairs between atoms.

Valence Electrons

The electrons in the outermost shell of an atom that are involved in forming chemical bonds.

Sulfur

A chemical element with the symbol S, known for its importance in biological organisms and its role in various chemical compounds.