When the Fed Buys Bonds in the Open Market, in the Product

question 145

Multiple Choice

When the Fed buys bonds in the open market, in the product market (the aggregate demand- aggregate supply model) ,

• A) real GDP will fall and the price level will rise.
• B) real GDP and the price level will rise.
• C) real GDP and the price level will fall.
• D) real GDP will rise and the price level will fall.

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Definitions:

Two-Factor Theory

A psychological theory, often applied to emotion or motivation, suggesting that an experience or emotion arises from the combination of a cognitive appraisal and a physiological response.

Cognitive Appraisal

The process of evaluating and interpreting a situation or event that determines its significance and the type of emotional response it elicits.

Cannon-Bard Theory

A theory of emotion that argues emotions and physiological responses occur simultaneously and independently.

Cannon-Bard Theory

The Cannon-Bard theory of emotion asserts that we experience physiological arousal and emotional feelings simultaneously, not sequentially, in response to a stimulus.