Table 26-2 -Refer to Table 26-2.Consider the Hypothetical Information in the Table

question 95

Multiple Choice

Table 26-2

-Refer to Table 26-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy.If the Fed wants to keep real GDP at its potential level in 2015,it should

• A) buy Treasury securities.
• B) sell Treasury securities.
• C) decrease the required reserve ratio.
• D) decrease income taxes.

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Definitions:

Planned Behavior

A theory that suggests human action is guided by behavioral intentions, which are influenced by attitudes, subjective norms, and perceived control.

Illegal Downloading

The act of obtaining files, such as music, movies, or software, from the internet without proper authorization or payment.

Intervention

The act of intervening in a situation or process to improve outcomes or prevent undesirable consequences.

Cognitive Dissonance

The discomfort experienced when holding two or more conflicting cognitions (ideas, beliefs, values, emotional reactions).