According to the AS/AD Model, If the Economy Is in a Recession

question 234

Multiple Choice

According to the AS/AD model, if the economy is in a recession and the Fed wants to increase output and employment, it should:

• A)act to increase the money supply.
• B)act to decrease the money supply.
• C)raise interest rates.
• D)raise reserve requirements.

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Definitions:

Prepaid Expenses

Expenses paid in advance for goods or services to be received in the future, recognized as assets on the balance sheet until they are incurred.

Economic Value

The worth of a good or service determined by its ability to satisfy needs or wants, as well as its scarcity and utility.

Future Economic

Future economic refers to projections or expectations about economic conditions and their effects on investment, spending, and economic growth in the future.

Accrued Expense

Expenses that have been incurred but not yet paid or recorded in the financial statements, recognizing expenses when they are incurred, not when paid.