Refer to the Figure Below

question 105

Multiple Choice

Refer to the figure below. If the Federal Reserve wants to raise the interest rate to 7%, it must ______ the money supply to _____.

• A) increase; 300
• B) decrease; 300
• C) increase; 900
• D) increase; 700

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Definitions:

Functional Fixedness

A mental shortcut that restricts an individual to employing an item solely in its conventional manner, obstructing innovative thinking and the ability to solve problems.

Availability Heuristic

A cognitive bias where people judge the likelihood of events based on how easily examples come to mind.

Elimination-by-aspects Strategy

A decision-making process where choices are sequentially eliminated based on whether they fail to meet certain criteria.

Alternate Outcomes Analysis

A decision-making process that involves considering different possible outcomes to evaluate the effectiveness of decisions.