If the Fed Wished to Eliminate an Inflationary Gap, Which

question 165

Multiple Choice

If the Fed wished to eliminate an inflationary gap, which of the following would be an appropriate policy?

• A) decease the government budget deficit
• B) raise the federal funds rate
• C) lower the federal funds rate
• D) buy government securities

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Definitions:

Mutual Mistake

A situation in legal contracts where all parties involved have misconceptions about a vital fact at the time of agreement.

Disclaimer

A statement that denies something, especially responsibility.

Negligent Misrepresentation

A false statement made carelessly that induces another party to enter into a contract, resulting in harm or loss.

Fraudulent Misrepresentation

A false statement made knowingly or recklessly designed to induce another party to enter into a contract.