If the Fed Believes That Real GDP Is Below Potential

question 108

Multiple Choice

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

• A)lower interest rates to shift the AD curve to the right and the IA line upward.
• B)do nothing and wait for the IA line to shift and return real GDP to potential GDP at a lower inflation rate.
• C)lower interest rates to shift the AD curve to the right.
• D)lower interest rates to shift the IA line downward.
• E)lower interest rates to shift the AD curve to the right and the IA line downward.

Grasp the basics of taste and how it functions.

Differentiate between the skin senses and their importance.

Know the role and mechanics of pain within the somesthetic system.

Distinguish between primary tastes and their detection.

---

Definitions:

Positive Externalities

Benefits experienced by third parties or society at large from an economic transaction, such as improved public health or education levels, not reflected in market prices.

Subsidies

Financial support from the government to businesses, individuals, or other governmental bodies to encourage or maintain an activity that has a public good.

Liability Rules

Legal principles that determine how the responsibility for damages or losses is allocated among parties in legal disputes.

Pollution

The occurrence or entry of harmful or toxic materials into the environment.