If the Fed Wanted to Stimulate the Economy to Limit

question 52

Multiple Choice

If the Fed wanted to stimulate the economy to limit the effects of a recessionary gap, then it should__________ the federal funds rate in order to__________ the real interest rate and thereby__________ investment.

• A) lower; lower; decrease
• B) lower; raise; increase
• C) raise; raise; decrease
• D) lower; lower; increase

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Definitions:

Organism

An individual living entity that can react to stimuli, reproduce, grow, and maintain homeostasis.

Endoskeleton

Bony and/or cartilaginous structures within the body that provide support. Compare with exoskeleton.

Vestigial Structure

A feature in an organism that has lost all or most of its original function through the process of evolution.

Pelvis

The lower part of the torso in human anatomy, forming a basin-shaped complex of bones that connects the spine to the lower limbs and houses reproductive organs.