If the Fed Increases the Monetary Base by $40 Billion

question 2

Multiple Choice

If the Fed increases the monetary base by $40 billion through open-market operations:

• A) GDP will increase by $40 billion.
• B) the price level will increase by $40 billion.
• C) the U.S. government debt held by the public has been reduced by $40 billion.
• D) government spending has increased by $40 billion.

---

Definitions:

Standard Error

The typical deviation found within the distribution of samples for a statistic, usually referring to the mean.

Independent Samples

Independent samples refer to two or more groups of data that are collected from separate, non-overlapping populations, ensuring they are not influenced by each other.

Normal Populations

The term "normal populations" relates to groups or sets of entities that exhibit characteristics distributed according to a normal (Gaussian) distribution.

Sampling Distribution

The likelihood distribution of a specific statistic derived from a random sample, which is utilized to draw conclusions about the broader population that the sample represents.