When the Fed Reduces the Real Interest Rate,which of the Following

question 38

Multiple Choice

When the Fed reduces the real interest rate,which of the following does NOT increase?

• A) consumption
• B) investment
• C) government purchases
• D) net exports

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Definitions:

Flexible Exchange Rates

A foreign exchange system where the value of currencies is determined by market forces without direct government intervention.

Libras

A constellation in the zodiac, symbolized by the scales, or in a financial context, might be mistaken for "libra," which refers to a unit of weight or a former currency.

Freely Floating Exchange Rates

Exchange rates that are determined by the supply and demand for currencies in the foreign exchange market without direct intervention by countries' governments.

Imports

Goods or services brought into a country from abroad for sale, contrasted with exports, which are sent out of a country.