If the Federal Reserve Offsets a Negative Shock to Aggregate

question 63

Multiple Choice

If the Federal Reserve offsets a negative shock to aggregate demand with increased money growth:

• A) inflation will rise,but real GDP growth will remain unchanged.
• B) inflation will fall,but real GDP growth will remain unchanged.
• C) both inflation and real GDP growth will rise.
• D) both inflation and real GDP growth will fall.

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Free Cash Flow

The amount of cash generated by a business after accounting for operational expenses and capital expenditures, indicating financial health and liquidity.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Net Cash Provided

The amount of cash generated from a company's operating, investing, and financing activities during a specific period.