Use the Following to Answer Questions

question 90

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Demand and Investment 2
-(Exhibit: Aggregate Demand and Investment 2) To eliminate the output gap, policy makers could conduct

• A) an open market sale to raise interest rates and reduce investment spending which will shift the aggregate demand curve to the left.
• B) an open market sale to lower interest rates and stimulate investment spending which will shift the short-run aggregate supply curve to the right.
• C) an open market purchase to raise interest rates and reduce investment spending which will shift the aggregate demand curve to the left.
• D) an open market purchase to lower interest rates and stimulate investment spending which will shift the short-run aggregate supply curve to the left.

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Definitions:

Recall

The ability to retrieve and reproduce information from memory that was previously learned.

Relearning

The process of learning material or skills that were once learned and then forgotten.

Retention

The ability to store and recall information or experiences over time.

Recency Effect

A cognitive bias that predisposes individuals to remember the most recently presented information better than information presented earlier.