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

question 46

Multiple Choice

Based on the diagram, if potential output equals 5,000 and the real interest rate is 3 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:

Simp

Slang for a person who overly defers to someone else, typically a man excessively reverent or submissive towards a woman.

CD

Can refer to a "Compact Disc" used for storing digital data or "Certificate of Deposit" in finance; context needed for specific definition.

Inference Forms

Patterns or structures of logical reasoning where conclusions are drawn from a set of premises.

MP

Short for "Member of Parliament," a representative elected to participate in the legislative process of a parliamentary democracy.