If the Fed Wished to Eliminate an Inflationary Gap, Which

question 44

Multiple Choice

If the Fed wished to eliminate an inflationary gap, which of the following would be an appropriate policy?

• A) raise the federal funds rate
• B) lower the federal funds rate
• C) buy government securities
• D) decease the government budget deficit

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Definitions:

Strengths and Weaknesses

An analysis or assessment of the positive (strengths) and negative (weaknesses) internal aspects of an organization.

Straight-Line Depreciation

A system for spreading out the cost of a tangible asset in equal yearly amounts across its functional life.

Average Rate of Return

A financial metric used to evaluate the profitability of an investment, calculated as the average annual profit divided by the initial investment cost.

Annual Income

The total earnings or revenue generated by an individual or business in one fiscal year before any deductions.