If the Intersection of the IS Curve with the Horizontal

question 28

Multiple Choice

If the intersection of the IS curve with the horizontal axis comes at a level of output below the natural level of output,the Fed

• A)can easily bring the economy back to the full-employment level of output.
• B)loses control of the economy.
• C)must use contractionary model policy to correct economic problem.
• D)must decrease money supply and ignore interest rates.

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Definitions:

Spinal Reflexes

Automatic responses to certain stimuli that are mediated by the spinal cord, without direct involvement of the brain.

Painful Stimulus

A physical or psychological trigger that causes pain or discomfort to an individual.

Motor Response

A reaction or response of the body's muscles to a stimulus, such as moving your hand away from a hot surface.

Neuron

A specialized cell transmitting nerve impulses; a nerve cell.