Which of the Following Situations Is One in Which the Fed

question 197

Multiple Choice

Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy?

• A)Potential GDP is forecasted to be higher than equilibrium GDP.
• B)Potential GDP is forecasted to be lower than equilibrium GDP.
• C)Aggregate demand is growing too fast to keep the economy at full employment.
• D)Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.

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Definitions:

Machine-Hours

A measure of the amount of time a machine is operated, used in allocating machine costs to units of production.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual products or job orders based on a certain activity base, such as machine hours or labor hours.

Machine-Hours

A unit of measure that represents the operational time of a machine, used in allocating manufacturing overhead based on the time machines are run.

Plantwide Predetermined

A rate, often related to overhead costs, that is set before the accounting period begins and applied uniformly throughout an entire plant or organization.