If the Federal Reserve Takes No Countervailing Actions, an Expansionary

question 13

True/False

If the Federal Reserve takes no countervailing actions, an expansionary fiscal policy will increase the deficit, increase GDP, increase prices, and drive up interest rates.

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Definitions:

Bowed Outward

Describes a curve on a graph, typically a production possibility frontier, indicating increasing opportunity costs when shifting resources between two goods.

Opportunity Cost

The cost of choosing one option over another, typically the best alternative forgone as a result of making a decision.

Efficient

Efficiency refers to the optimal production and distribution of resources in a way that best meets the needs and desires of consumers.

Scarce Resources

Natural, human, and capital resources that are limited in supply and can be used for the production of goods and services.