If the Fed Wants to Fight Inflation, It Will ________

question 7

Multiple Choice

If the Fed wants to fight inflation, it will ________ the federal funds rate in order to ________.

• A) raise; decrease aggregate demand
• B) raise; decrease aggregate supply
• C) raise; increase aggregate supply
• D) lower; increase aggregate supply
• E) lower; decrease aggregate demand

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Definitions:

Currency Exchange Rate

The value of one currency for the purpose of conversion to another.

Country's Currency

The legal tender issued by a country's government, used as a medium of exchange within its economy.

Income Distribution

The way in which total income is shared amongst the population or different groups within society.

Per Capita Incomes

The average income earned per person in a certain area or country, calculated by dividing the area's total income by its total population.