Suppose the Fed Pursues a Policy That Leads to Higher

question 71

Multiple Choice

Suppose the Fed pursues a policy that leads to higher interest rates in the United States.How will this policy affect real GDP in the short run if the United States is an open economy? This policy

• A)reduces investment spending,consumption spending and net exports,all of which reduce GDP.
• B)reduces investment spending and consumption spending,both of which reduce GDP.Net exports rise which increases GDP.
• C)reduces investment spending and consumption spending,both of which reduce GDP.Net exports fall which increases GDP.
• D)increases investment spending,consumption spending,and net exports,all of which increase GDP.

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Definitions:

Less Conscientious

relates to individuals who tend to be less careful, diligent, and organized in their personal or professional life.

Signalling Theory

Job applicants interpret their recruitment and selection experiences as cues or signals about unknown characteristics of a job and an organization and what it will be like to work in an organization.

Harshness

The quality of being extremely strict or severe in conditions or treatment.

Perceptual Biases

Cognitive biases that result from the simplification of processing social realities, often leading to distorted interpretations.