If the Fed Lowers the Federal Funds Rate, the First

question 23

Multiple Choice

If the Fed lowers the federal funds rate, the first effect in an AS/AD figure is a __________shift of the__________ curve.

• A) leftward; SAS
• B) rightward; SAS
• C) rightward; AD
• D) leftward; AD

---

Definitions:

"New Normal"

Describes a previously unfamiliar situation that has become standard or expected, often used in the context of changes in societal or economic conditions.

Production Sectors

The division of an economy into different groups or areas of production, such as agriculture, manufacturing, and services.

Planning Fallacy

The tendency for people and organizations to underestimate the time, costs, and risks of future actions and overestimate the benefits.

Bottlenecks

Points of congestion or blockage in a production process or system that lead to inefficiencies and delays.