If the Economy Is Inflationary, the Fed Would Most Likely

question 95

Multiple Choice

If the economy is inflationary, the Fed would most likely:

• A) encourage banks to provide loans by buying government securities.
• B) encourage banks to provide loans by raising the discount rate.
• C) encourage banks to provide loans by selling government securities.
• D) restrict bank lending by selling government securities.
• E) restrict bank lending by lowering the federal funds rate.

Understand the coordination of eye movements and the muscles involved.

Understand the basic concepts of fixed, variable, and total costs in economic decision-making.

Distinguish between sunk costs and relevant costs for decision-making.

Apply the concept of opportunity cost accurately in various scenarios.

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Definitions:

Misery Index

An economic indicator created by adding the unemployment rate to the inflation rate, meant to represent the average citizen's economic well-being.

Unemployment Rate

The segment of the labor force that is currently jobless and engaging in job-seeking activities.

Deflation

A decrease in the general price level of goods and services, often indicating a contraction in the amount of money and credit in the economy.

Average Price Level

A general measure of price changes across the economy, indicating the cost of purchasing a typical basket of goods and services.