"When the Fed Is Concerned with an Inflationary Gap It

question 91

Essay

"When the Fed is concerned with an inflationary gap it buys government securities." Is the previous statement correct or incorrect?
Explain your answer.

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Definitions:

Commodity

A fundamental product utilized in trade that can be exchanged for others of its kind.

Tariffs and Quotas

Government-imposed trade restrictions; tariffs are taxes on imported goods, while quotas are limits on the quantity of goods that can be imported.

Quotas

Restrictions imposed by a government on the quantity of a good that can be imported or exported during a specific period.

Tariffs

Taxes imposed by a government on imported goods to protect domestic industries or raise revenue.