If There Is a Sudden Increase in Government Spending,which of the Following

question 113

Multiple Choice

If there is a sudden increase in government spending,which of the following should the Fed do if it wants to keep the price level steady?

• A) Do nothing,since the self-correcting mechanism will adjust the economy
• B) Sell bonds in the open market
• C) Wait,since the price level usually does not change when government spending increases
• D) Decrease the required reserve ratio
• E) Buy bonds in the open market.

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Definitions:

Genotype

The genetic makeup of an organism, consisting of all the DNA and genes.

Dominant Trait

A trait that is expressed or visible when a gene variant (allele) is present, even when its counterpart allele is a different variant.

Brown Eyes

A common eye color resulting from a high concentration of melanin in the iris.

Blue Eyes

Blue eyes are a physical trait characterized by the lack of melanin in the iris, which results in light being scattered and reflected, thus appearing blue.