To Eliminate a Recessionary Gap the Fed Typically Uses __________

question 48

Multiple Choice

To eliminate a recessionary gap the Fed typically uses __________ monetary policy,and to eliminate an inflationary gap the Fed typically uses __________ monetary policy.

• A) expansionary; expansionary
• B) expansionary; contractionary
• C) contractionary; contractionary
• D) contractionary; expansionary

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Definitions:

Production Possibility Frontier

An illustration representing the peak production capabilities of two items, based on available resources.

Capital

Assets used for the production of goods and services, including machinery, buildings, and equipment.

Production Possibility Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs and technology.

Capital

Refers to financial resources, machinery, and buildings used for producing goods and services.