Based on the Diagram, If Potential Output Equals 5,000 and the Real

question 111

Multiple Choice

Based on the diagram, if potential output equals 5,000 and the real interest rate is 5 percent, then there is ________ gap and the Fed must ________ the real interest rate so that output will equal potential output.

• A)a recessionary; raise
• B)a recessionary; reduce
• C)no output; not change
• D)an expansionary; raise

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Definitions:

Desired Value

The target or setpoint value that a system or process aims to achieve or maintain.

LED Display

A flat panel display that uses light-emitting diodes as pixels for a video display, common in consumer electronics and advertisement boards.

Logic

The system or principles underlying the arrangement and operation of a computer or complex electronic device focusing on conditional operations and decision-making.