If the Fed Believes That Real GDP Is Above Potential

question 157

Multiple Choice

If the Fed believes that real GDP is above potential GDP, it will

• A)raise interest rates to shift the AD curve to the left and the IA line downward.
• B)raise interest rates to shift the IA line downward.
• C)raise interest rates to shift the AD curve to the left.
• D)lower interest rates to shift the IA line downward.
• E)lower interest rates to shift the AD curve to the left.

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Definitions:

Hyperextension

An excessive extension of a limb or part of the body beyond its normal limit.

Circumduction

A movement at a synovial joint where the limb moves in a circle.

Shoulder

A complex structure involving bones, joints, muscles, and tendons, facilitating a wide range of arm movements.

Hip

A body region where the thigh bone (femur) joins with the pelvis, forming a ball-and-socket joint that allows for movement in several directions.