Suppose That During a Period of Inflation, the Fed Reduced

question 169

Multiple Choice

Suppose that during a period of inflation, the Fed reduced its holdings of U.S. securities from $600 billion to $580 billion. This indicates that the Fed was

• A) seeking to reduce the money supply to decrease inflation.
• B) trying to force Congress to decrease taxes.
• C) expanding the money supply and stimulating employment.
• D) expanding the money supply, even though the existing inflation suggested a restrictive policy would be more appropriate.

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Definitions:

Perceptual Reactivity

The degree to which an individual is sensitive or responsive to sensory stimuli.

Subliminal Perception

involves detecting information below the threshold of conscious awareness, influencing thoughts, feelings, or actions without conscious realization.

Effect on Behavior

The impact that various factors, such as environment, psychology, and genetics, have on how individuals act or respond to situations.

Cocktail Party Phenomenon

The ability of individuals to focus their attention on a single conversation in a noisy environment, filtering out other conversations.