If the Fed Responds to Repeated Decreases in the Short-

question 269

Multiple Choice

If the Fed responds to repeated decreases in the short- run aggregate supply with repeated increases in the quantity of money, the economy will be faced with

• A) alternating periods of inflation and deflation.
• B) continuous inflation.
• C) steady decreases in real GDP.
• D) a one- time increase in prices.

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Definitions:

Corrective Action

An action taken to rectify or eliminate the cause of a detected non-conformance, defect, or other undesirable situation to prevent recurrence.

Measure Actual Performance

Measuring actual performance involves assessing the real outputs or results of processes, individuals, or organizations against planned or expected outcomes.

Control Process

A systematic effort to set performance standards, measure actual performance, and take corrective action as necessary.

Establish Objectives

The act of identifying and setting specific goals or targets that an organization or individual aims to achieve.