If the Fed's Monetary Policy Reaction Function Does Not Change

question 124

Multiple Choice

If the Fed's monetary policy reaction function does not change, then when inflation increases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.

• A)increasing; increases; increases
• B)increasing; increases; decreases
• C)increasing; decreases; decreases
• D)decreasing; decreases; decreases

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Definitions:

Circle

A simple geometric shape consisting of all points in a plane that are a given distance from a given point, the center.

Language

A system of symbols, sounds, and rules used by people to communicate thoughts, expressions, and ideas to others.

Nonhuman Animals

Refers to all animal species that are not human beings, used in contexts discussing biological, ethical, or psychological studies.

Phonemes

The smallest audible language part that changes the meaning of words when altered.