Which of the Following Describes the Chain of Events the Fed

question 194

Multiple Choice

Which of the following describes the chain of events the Fed uses to fight recession?

• A) Raise the federal funds rate target, sell government securities, decrease reserves and loans, increase aggregate demand.
• B) Raise the federal funds rate target, buy government securities, increase reserves and loans, decrease aggregate demand.
• C) Lower the federal funds rate target, buy government securities, increase reserves and loans, increase aggregate demand.
• D) Lower the federal funds rate target, buy government securities, decrease reserves and loans, decrease aggregate demand.

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Definitions:

Short-Run Equilibrium

A state in which supply equals demand within a particular market, specifically under the assumption that some conditions (like input prices) are fixed in the short term.

Marginal Cost

The charge for the production of one more unit of a product or service.

Marginal Revenue

The enhanced earnings a firm receives from offloading an extra unit of a good or service.

Marginal Cost

Marginal cost is the increase in total cost that arises from producing one additional unit of a good or service, a critical concept in economic decision-making and pricing strategies.