If the Federal Reserve Raises Interest Rates in an Autonomous

question 74

Multiple Choice

If the Federal Reserve raises interest rates in an autonomous tightening ________.

• A)the MP curve shifts up,raising the real interest for any given level of the inflation rate
• B)there is an upward movement along the IS curve
• C)the AD curve shifts to the left
• D)all of the above
• E)none of the above

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Definitions:

Semiannual Interest

Interest that is both computed and disbursed semi-annually on an investment or loan.

Bond Discount

The financial disparity that occurs when a bond is sold for an amount below its stated face value, comparing its selling price to its face value.

Interest Method

A financial calculation used to determine the amount of interest due or earned over a specific period of time, considering factors like principal, rate, and time.

Annuity

An investment vehicle that provides a consistent series of payments to a person, mainly serving as a source of income for those who have retired.