The Federal Reserve Only Truly Had a Mandate to Reduce

question 33

Multiple Choice

The Federal Reserve only truly had a mandate to reduce inflation beginning in the

• A)Great Depression.
• B)Korean War.
• C)Vietnam War.
• D)peacetime inflation of the late 1970s.
• E)Great Recession of 2008.

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Definitions:

Normal Good

A good for which demand increases as the income of consumers increases and vice versa, all else being constant.

WARP

WARP, or the Weak Axiom of Revealed Preference, is an economic principle stating that if a consumer chooses one bundle of goods over another when both are available, then they will not choose the second bundle when the first one remains available.

Perfect Complements

Goods that are always consumed together in fixed proportions because their consumption provides utility only when combined, such as left and right shoes.

Income Effect

The change in an individual's consumption choices that results from a change in their real income or purchasing power.