The Fed Can ____ the Level of Spending as a Means

question 2

Multiple Choice

The Fed can ____ the level of spending as a means of stimulating the economy by ____ the money supply.

• A)increase; decreasing
• B)decrease; increasing
• C)decrease; decreasing
• D)increase; increasing

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Definitions:

Inflationary Pressure

Situations or conditions that lead to an increase in prices across the economy, possibly reducing the purchasing power of money.

Market Interest Rate

The prevailing rate of interest available in the loanable funds market, influenced by supply and demand for credit, central bank policy, and investors’ expectations.

Anti-inflation

Measures and policies implemented to reduce or control the rate of inflation in an economy.

Cold Turkey

The announcement and execution of tough measures to reduce high inflation.