Suppose the Fed Increases the Money Supply

question 13

Multiple Choice

Suppose the Fed increases the money supply. As a result of this, people go out and spend more money on consumer goods, increasing aggregate spending. This is known as a(n)

• A) direct effect of monetary policy.
• B) indirect effect of monetary policy.
• C) direct effect of fiscal policy.
• D) indirect effect of fiscal policy.

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Definitions:

Constructive Memory

A theory that suggests memories are not exact replicas of events but rather reconstructions that can be influenced by various factors and susceptible to errors.

Shallow Processing

Shallow processing is a cognitive approach where individuals focus on surface characteristics such as the appearance or sound of words, rather than their meanings, leading to less durable memory.

Early Selection

A theory in attention that suggests stimuli are filtered or selected to be attended to at an early stage of processing, based on physical characteristics.

Sensory Memory

The shortest-term element of memory, which stores sensory impressions for a very brief period, allowing us to experience the world as a continuous stream.