If the Fed Raises the Federal Funds Rate, Eventually the

question 53

Multiple Choice

If the Fed raises the federal funds rate, eventually the

• A)AD curve shifts leftward, decreasing real GDP and increasing the price level.
• B)AD curve shifts leftward, decreasing real GDP and the price level.
• C)AS curve shifts rightward, decreasing real GDP and increasing the price level.
• D)AD curve shifts rightward, increasing real GDP and the price level.
• E)AS curve shifts leftward, decreasing real GDP and increasing the price level.

Recognize examples of negative and positive externalities in various contexts.

Apply the Coase theorem to potential solutions for externality problems through negotiation.

Evaluate the effects of externalities on supply and demand curves in graphical analysis.

Discuss the economic rationale behind not achieving zero pollution despite its negative effects.

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Definitions:

Finance

The management of large amounts of money, especially by governments or large companies, including the processes of investing, borrowing, lending, budgeting, saving, and forecasting.

Stocks and Bonds

Financial instruments that represent ownership in a company (stocks) and debt obligations (bonds), respectively, offering different levels of risk and potential returns.

Cash Flows

The aggregate sum of funds flowing in and out of a company, significantly influencing its ability to meet short-term obligations.

Expected Cash Flows

The anticipated stream of cash payments or receipts over a given period, used in evaluating investments or business projects.