Figure 14-6 -In the Situation Shown in Figure 14-6, How Could the How

question 8

Multiple Choice

Figure 14-6
-In the situation shown in Figure 14-6, how could the Fed return the economy to potential output?

• A)decrease government spending
• B)decrease taxes
• C)sell U.S.government bonds to banks
• D)lower the discount rate
• E)lower the required reserve ratio

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Definitions:

Defense Plants

Industrial facilities that produce military equipment and supplies for a country's defense forces.

Arsenal of Democracy

A term coined by President Franklin D. Roosevelt during World War II, referring to the idea that the United States had the responsibility to supply Allied nations with the materials needed to defeat the Axis Powers.

Doolittle Raid

A military operation during World War II in which U.S. aircraft bombed Tokyo and other Japanese cities in 1942, the first air raid to strike the Japanese Home Islands.

Battle of Midway

A pivotal World War II battle in June 1942, where the United States Navy decisively defeated an attacking fleet of the Japanese Navy, marking a turning point in the Pacific Theater of the war.