Exhibit 16-4 Aggregate Demand and Supply Model

question 89

Multiple Choice

Exhibit 16-4 Aggregate demand and supply model

In Exhibit 16-4, which one of the following actions could the Fed use to shift the AD curve from AD₁ to AD₂?

• A) raise the legal reserve requirement
• B) raise the discount rate
• C) lower the federal funds rate
• D) buy government securities

---

Definitions:

Henri Fayol

A French engineer and scholar who is famous for developing the general theory of business administration and identifying the five primary functions of management.

Discrimination

Unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.

Accounting Fraud

Intentional manipulation or falsification of financial records or transactions to deceive stakeholders, often resulting in financial gain for the perpetrator or the company.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.