If the Fed Responds to an Increase in Aggregate Demand

question 54

Multiple Choice

If the Fed responds to an increase in aggregate demand by increasing the quantity of money,

• A) nothing happens because aggregate demand had already increased.
• B) output will begin to decrease more rapidly than otherwise.
• C) money wage rates will fall to reduce the unemployment.
• D) there will be continued inflation.

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Definitions:

Corpus Callosum

A broad band of nerve fibers joining the two hemispheres of the brain, facilitating communication between them.

Nonfluent Aphasics

Individuals who struggle with speech production often characterized by slow, labored speech and struggle to form complete sentences, typically due to brain damage.

Fluent Aphasics

Individuals who can speak with normal fluency but have difficulty in understanding language or finding the correct words due to a brain disorder.

Produce Speech

The process of creating and expressing verbal language through the use of the vocal tract, including the manipulation of vocal cords and articulation.