If the Fed Responds to an Increase in Aggregate Demand

question 108

Multiple Choice

If the Fed responds to an increase in aggregate demand by increasing the quantity of money,

• A) output will begin to decrease more rapidly than otherwise.
• B) there will be continued inflation.
• C) nothing happens because aggregate demand had already increased.
• D) money wage rates will fall to reduce the unemployment.

---

Definitions:

Growth Rate of Earnings

It is the rate at which a company's earnings are increasing or decreasing over a specific period, often used by investors to gauge the company's profitability trends.

Constant-Growth DDM

A model for valuing a stock by assuming constant dividends that grow at a steady rate indefinitely.

Beta

A gauge for determining the volatility or inherent risk of a security or portfolio against the market at large.

Dividend

A disbursement from a company to its shareholders, commonly in the form of profit distribution.