Which One of the Following Actions Is the Federal Reserve

question 35

Multiple Choice

Which one of the following actions is the Federal Reserve most likely to take if it is concerned about a slowing economy?

• A)lower the tax rate
• B)lower the discount rate
• C)increase the call rate
• D)increase the tax rate
• E)increase the discount rate

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Definitions:

Money Supply

The total amount of money available in an economy at a particular time, including cash, coins, and balances held in checking and savings accounts.

Expected Price Level

This term represents the anticipated average price of goods and services in an economy over a certain period.

Potential GDP

The maximum possible level of output an economy can achieve when all resources are utilized efficiently, without causing inflation.

Prices

The amount of money required to purchase goods or services, acting as a signal in the market to influence supply and demand.