An Upward Shift in the Fed's Policy Reaction Function Corresponds

question 60

Multiple Choice

An upward shift in the Fed's policy reaction function corresponds to a ________ the aggregate demand curve and an increase in exogenous spending corresponds to a ________ the aggregate demand curve.

• A)shift left of; movement up
• B)shift left of; shift right of
• C)shift right of; shift left of
• D)movement up; shift right of

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Definitions:

Stock Variable

A measurement at a specific point in time, such as the amount of money in a bank account or stock of goods.

Flow Variable

A variable that is measured over a specific period of time, representing dynamic elements of an economy like income or spending.

Federal Budget Deficit

The deficit occurring when government spending surpasses its income in a specific fiscal year.

National Debt

The total amount of money that a country's government has borrowed, by various means, and has yet to repay.