Table 15-1 -Refer to Table 15-1.The Hypothetical Information in the Table Shows

question 58

Multiple Choice

Table 15-1

-Refer to Table 15-1.The hypothetical information in the table shows what the values for real GDP and the price level will be in 2019 if the Fed does not use monetary policy.Which of the following policies makes sense if the Fed wants to keep real GDP at its potential level in 2019?

• A)The trading desk should sell Treasury securities.
• B)The Fed should lower the target for the federal funds rate.
• C)The Fed should pursue contractionary policy.
• D)The Fed should lower capital gains taxes.

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Definitions:

Lower-order Needs

Basic physiological and safety needs at the bottom levels of Maslow’s hierarchy, which must be satisfied before higher-level needs can be addressed.

Maslow

Refers to Abraham Maslow, a psychologist known for creating Maslow's hierarchy of needs, a theory in psychology that prioritizes human needs from basic to self-fulfillment.

Physiological

Relating to the functions and processes that occur within living organisms, especially in terms of how they support life and health.

Esteem

The regard in which an individual or entity is held by others; often related to respect and admiration.