-Refer to Figure 16-1 $\mathrm { M } _ { 1 } ^ { \mathrm { D } }$

question 21

Multiple Choice

-Refer to Figure 16-1.Suppose a demand shock causes output to rise above full employment and increases money demand from $\mathrm { M } _ { 1 } ^ { \mathrm { D } }$ to $\mathrm { M } _ { 2 } ^ { \mathrm { D } }$ .If the Fed wants to maintain the interest rate at r?,it will

• A) use a constant monetary supply policy
• B) increase the money supply,which will increase aggregate demand and increase output further in the short run
• C) increase the money supply,which will increase the price level,decrease aggregate demand,and lower output back to full employment
• D) decrease money demand,decrease the interest rate,and decrease aggregate demand until output returns to full employment
• E) be unable to meet its interest rate target without causing a recession.

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Definitions:

Satisfied Needs

Fulfillment of wants or necessities required for an individual's well-being or contentment.

Intrapreneurship

Refers to the practice of fostering entrepreneurial behavior within a large organization, encouraging employees to innovate and pursue new ideas.

Personal Growth

The process of improving self-awareness, developing talents, and refining personal qualities to enhance the quality of life.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, depicting a five-tier model of human needs, arranged in a pyramid, with physiological needs at the bottom and self-actualization at the top.