Which of the Following Is the Least Likely to Take

question 54

Multiple Choice

Which of the following is the least likely to take place if the Fed responds to a negative demand shock by reducing the real interest rate?

• A) The IS curve shifts to the right.
• B) Output gap returns to zero.
• C) Inflation returns to its previous rate.
• D) The MP curve shifts down.

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Definitions:

Accounting

The systematic process of recording, analyzing, summarizing, and reporting financial transactions of a business or individual.

Oligopolies

Oligopolies are market structures characterized by a small number of firms dominating the market, leading to limited competition.

Oligopolistic Firms

Companies operating in an oligopoly market structure where a small number of firms have significant market power and can influence market prices and decisions.

Interdependence

A situation where entities are dependent on each other, often observed in global economies where countries rely on others for resources, technology, or markets.