Exhibit 20-4  Aggregate Demand and Supply Model in Exhibit 20-4

question 240

Multiple Choice

Exhibit 20-4  Aggregate demand and supply model In Exhibit 20-4, which one of the following actions could the Fed use to shift the AD curve from AD₁ to AD₂?

• A) Lower the legal reserve requirement.
• B) Lower the federal funds rate.
• C) Print currency.
• D) Raise the discount rate.
• E) Sell government securities.

---

Definitions:

Price Earnings Ratio

A financial metric comparing the current price of a company's stock to its earnings per share to assess whether the stock is undervalued or overvalued.

Earnings Per Share

A financial ratio that measures the amount of a company's profit allocated to each outstanding share of common stock.

Market Value

The financial value at which an asset could be bought or sold in the market.

Total Debt Ratio

A financial metric that divides the total liabilities of a company by its total assets.