If There Is a Decrease in World Oil Prices and the Fed

question 2

Multiple Choice

If there is a decrease in world oil prices and the Fed wishes to maintain output stability,what should it do?

• A) Buy bonds in the open market.
• B) All the economy to adjust itself.
• C) Sell bonds in the open market.
• D) Impose higher taxes to counteract the supply shock.
• E) Lower taxes to maintain output.

---

Definitions:

Efficacy

The ability to produce a desired or intended result, often used in the context of medications or treatments.

Anorexia

A psychological disorder marked by a persistent terror of becoming overweight and a deliberate avoidance of achieving a normal body weight.

Cognitive-Behavioral Therapy

A form of psychotherapy that treats problems by modifying dysfunctional emotions, behaviors, and thoughts through a goal-oriented, systematic approach.

Negative Reinforcements

A behavioral psychology concept where the removal of an unpleasant stimulus strengthens a particular response or behavior.