When Aggregate Demand Decreases, the Fed Will Want to Use

question 109

Multiple Choice

When aggregate demand decreases, the Fed will want to use its policy tools to

• A) keep aggregate demand lower until wages catch up.
• B) quickly bring aggregate demand back to its original position.
• C) push aggregate demand higher than it was originally to make up for lost growth potential.
• D) None of these answers is correct.

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Definitions:

Repudiation

The refusal to accept or be associated with, often involving a contract or agreement.

Frustration of Purpose

A legal defense allowing for the termination of a contract when an unexpected event undermines the contract's core purpose.

General Contract Law

The body of law that governs the formation, execution, and enforcement of agreements between parties.

Right of Inspection

The legal right to examine and review a company's books, records, and documents, typically granted to directors, officers, and shareholders.