Figure 11-1 -Refer to Figure 11-1.Suppose the Fed Takes Action That Shifts

question 107

Multiple Choice

Figure 11-1

-Refer to Figure 11-1.Suppose the Fed takes action that shifts the demand curve from D to D′, as illustrated in Panel (a) .As a result, the interest rate ______ and investment _____.

• A)increases; increases
• B)increases; decreases
• C)decreases; increases
• D)decreases; decreases

---

Definitions:

John Maynard Keynes

A notable British economist whose theories substantially modified the framework of macroeconomics and influenced the economic decision-making of governments.

Scarcity

A fundamental economic problem of having seemingly unlimited human wants in a world of limited resources.

Production Possibilities Curve

The Production Possibilities Curve represents the maximum combination of goods or services that can be produced in an economy, given available resources and technology, illustrating the trade-offs and opportunity costs.

Unemployed Resources

Factors of production that are not being utilized to their full capacity, including labor, capital, and natural resources, often indicating economic inefficiency.