Refer to the Figure Below

question 55

Multiple Choice

Refer to the figure below.Based on the diagram, if potential output equals 5,000 and the real interest rate is 1%, then there is ______ gap and the Fed must ______ the real interest rate so that output will equal potential output.

• A)a recessionary; raise
• B)a recessionary; reduce
• C)an expansionary; reduce
• D)an expansionary; raise

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Definitions:

White Southerners

Refers to white inhabitants of the Southern United States, a group historically significant for its role in the Civil War, segregation, and the civil rights movement.

White House

The official residence and workplace of the President of the United States, located at 1600 Pennsylvania Avenue NW in Washington, D.C.

Frederick Douglass

A former enslaved African American who became a prominent abolitionist, orator, and writer in the 19th century, advocating for the rights of African Americans.

Emigrate

The act of leaving one's country or region to settle in another.