If the Economy Is at Potential Output and the Fed

question 308

Multiple Choice

If the economy is at potential output and the Fed increases the money supply, in the short run the aggregate demand will likely:

• A) shift to the left.
• B) remain the same.
• C) increase.
• D) decrease.

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Definitions:

Payments

Amounts of money transferred from one party to another as fulfillment of a financial obligation.

Life Annuity

An insurance product that provides the holder with a series of payments for the remainder of their life, in exchange for an initial lump sum payment.

Term Annuity

An annuity that provides regular payments over a fixed period of time, after which payments cease.

Compounded Monthly

A method of calculating interest where the accumulated interest is added to the principal at the end of each month, increasing the subsequent month's interest amount.