In Traditional (Before 2008) Analysis, an Autonomous Increase in Investment

question 153

True/False

In traditional (before 2008) analysis, an autonomous increase in investment spending when the economy is at full employment will
cause the Fed to seek a lower target for the federal funds rate by buying securities in the open market.

---

Definitions:

Capitalist Economy

A Capitalist Economy is an economic system where private individuals and businesses own the means of production and operate for profit, with minimal government intervention.

Financial Risk

The possibility of losing money on an investment or business venture.

Command Systems

Economic systems in which a centralized authority, typically the government, makes all decisions regarding the production and distribution of goods and services.

Market Systems

The network of buyers, sellers, and other actors that come together to trade in a given product or service, governed by supply and demand.