If the Fed Responds to an Increase in Aggregate Demand

question 298

Multiple Choice

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

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

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Definitions:

Fast-Food Restaurant

A type of restaurant that offers quick service, convenience, and food that is prepared and served quickly to the customer, often at a lower cost compared to full-service establishments.

Tightly Controlled Conditions

Environments or experiments where variables are strictly managed to ensure accurate and consistent results.

Cause And Effect

A principle signifying that an action or phenomenon invariably leads to or results in another, typically used to explain causality in events or processes.

Manipulating Factors

Variables that researchers or experimenters actively change or control to observe their effects on other variables.