If the Public Has Correct Rational Expectations and the Fed

question 9

Multiple Choice

If the public has correct rational expectations and the Fed increases both reserve requirements and the discount rate, it would be expected to result in:

• A)​a higher level of real output and a lower price level.
• B)​a lower price level but no change in real output.
• C)​a higher price level and a reduced level of real output.
• D)​a higher price level but no change in real output.

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Definitions:

Assertiveness

The quality of being self-assured and confident without being aggressive, allowing individuals to express their thoughts and feelings in a respectful manner.

Rights

Entitlements or freedoms that are guaranteed under law or by societal norms.

Self-Esteem

An individual's overall subjective emotional evaluation of their own worth or abilities.

Distraction

A condition of having one's attention diverted from a task or focus, often due to external stimuli or internal thoughts, leading to decreased productivity or awareness.