If the Fed Does Not Take into Account the Additional

question 250

Multiple Choice

If the Fed does not take into account the additional policy channels available in an open economy,then ________ when conducting contractionary monetary policy.

• A)it is likely to decrease GDP too much and cause a recession
• B)it is likely to decrease GDP too little and inflation will persist
• C)it is likely to increase GDP too much and inflation will persist
• D)it is likely to increase GDP too little and cause a recession

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Definitions:

Accrual Basis

An accounting method where transactions are recorded when they are earned or incurred, regardless of when cash is exchanged, offering a more accurate financial picture.

Cash Basis

An accounting method where revenues and expenses are recorded when they are actually received or paid, not when they are incurred.

Cash Receipts

The total amount of cash received by a business during a specified period.

Cash Flows

The net amount of cash and cash-equivalents being transferred into and out of a business, used to evaluate its financial health.