If the Fed Responds to an Initial Increase in Aggregate

question 184

Multiple Choice

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

• A) money wages will fall to reduce the unemployment.
• B) there is the risk of continued inflation.
• C) there will be no inflationary gap.
• D) real GDP will begin to decrease more rapidly than if the quantity of money had remained constant.

---

Definitions:

Sound Waves

Mechanical vibrations that travel through a medium such as air, water, or solid materials, and can be heard when they reach a human or animal ear.

Pulses

Rapid, transient changes in the amplitude of an electrical signal, often used to convey information or trigger specific actions in electronic devices.

Pressure Switch

A device that activates or deactivates electrical contact in response to changes in pressure level.