In Figure 15

question 48

Multiple Choice

In Figure 15.3,the Fed can decrease the equilibrium interest rate from 6 percent to 2 percent by

• A)Decreasing the reserve requirement.
• B)Decreasing the money supply.
• C)Selling bonds.
• D)Increasing the discount rate.

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Definitions:

External Benefits

Positive effects experienced by third parties as a result of an economic transaction not directly involved.

Efficient Outcome

A situation in which no individual can be made better off without making someone else worse off, typically referring to an optimal allocation of resources.

Output Level

The total quantity of goods or services produced by a firm or industry within a specific period.

External Costs

Costs that are not borne by the producer or consumer of a good or service, but by third parties or society as a whole, such as pollution.