If the Short-Run Equilibrium Output of the United States Exceeds

question 144

Multiple Choice

If the short-run equilibrium output of the United States exceeds the potential output,the Fed:

• A)employs an active monetary policy to close a recessionary gap.
• B)employs an active monetary policy to close an expansionary gap.
• C)relies on a passive approach to close a recessionary gap.
• D)relies on a passive approach to close an expansionary gap.
• E)employs an expansionary fiscal policy.

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Definitions:

Issuing Firm

A company or entity that offers securities for sale to the public or private investors, often to raise capital.

Bond Market

A financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market, primarily in the form of bonds.

Capital

Financial assets or the financial value of assets, such as cash, that can be used by a company to fund its operations and investments.

New Bonds

New bonds refer to debt securities that have been recently issued by a corporate or governmental entity to raise capital for various purposes.