Refer to the Figure Below

question 39

Multiple Choice

Refer to the figure below.If the Federal Reserve wants to lower the interest rate to 3%, it must ______ the money supply to _____.

• A)increase; 300
• B)decrease; 300
• C)increase; 900
• D)increase; 700

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Definitions:

Circular Flow

An economic model depicting the continuous movement of money, goods and services, and factors of production between producers and consumers in the economy.

Household

An economic unit that consists of all individuals who occupy a housing unit, regardless of their relationship.

Business

Organized efforts by individuals or entities to produce, sell goods or provide services for profit.

Factor Market

A marketplace where factors of production (e.g., labor, capital, land) are bought and sold.