Figure 26-10 -Refer to Figure 26-10.In the Figure Above,suppose the Economy in Above,suppose

question 116

Multiple Choice

Figure 26-10

-Refer to Figure 26-10.In the figure above,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Federal Reserve use to move the economy to point C?

• A) decrease income taxes
• B) increase the required-reserve ratio
• C) buy Treasury bills
• D) sell Treasury bills

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Definitions:

P(A|B)

The probability of event A occurring, given that event B has already occurred.

P(B|A)P(A)

Represents the probability of event B given event A has occurred, multiplied by the probability of event A; used in the calculation of joint probabilities.

Bayes' Law

A theorem that describes the probability of an event, based on prior knowledge of conditions that might be related to the event.

Conditional Probabilities

Probabilities of events given the occurrence of some other event.