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:

Generalization

A broad statement or concept derived from specific instances, often used to make predictions or assumptions about unobserved situations.

Plausible

Appearing likely or believable, though not necessarily true.

Method of Residues

A principle in problem-solving that identifies and subtracts known influences from a scenario to isolate unknown factors.

Bad Smell

In software development, it refers to any symptom in the source code that possibly indicates a deeper problem.