If the Fed Reduces the Discount Rate, Which of the Following

question 115

Multiple Choice

If the Fed reduces the discount rate, which of the following are most likely to result?

• A) The money supply curve shifts rightward, and the equilibrium interest rate falls in the money market.
• B) Investment declines, causing the aggregate demand curve to shift leftward, reducing equilibrium real GDP and thus slowing the economy.
• C) Investment rises, causing the aggregate demand curve to shift rightward, increasing equilibrium real GDP and thus accelerating the economy.
• D) Both a. and b. above are correct.
• E) Both a. and c. above are correct.

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Definitions:

Democratic Leadership

A leadership style characterized by encouraging open communication and sharing decision-making among team members to guide direction.

Personal Interests

The hobbies, goals, or activities that an individual is passionate about or pursues for personal satisfaction.

Personalized Power

Power used for personal gain, often at the expense of others, contrasting with power used for the benefit of others.

Exchanging Valued

Refers to the process of giving and receiving goods, services, or ideas that hold significance or worth to the involved parties.