If the Economy Is at Potential Output and the Fed

question 156

True/False

If the economy is at potential output and the Fed decreases the money supply so that actual output is less than potential output, eventually nominal wages will decrease.

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Definitions:

False Conclusion

An incorrect or misleading outcome derived from flawed reasoning or misunderstanding of facts.

Difficulty

The level of challenge or complexity associated with accomplishing a task or solving a problem.

Temporal Synchrony Bias

The cognitive bias whereby individuals give more weight to events that happen simultaneously or in close succession.

Sinister Attribution Bias

The tendency for people to perceive more malevolence in the actions or intentions of others than is actually present.