If There Is an Increase in the Price of Oil

question 134

Multiple Choice

If there is an increase in the price of oil and the Fed wishes to maintain price stability,what should it do?

• A) Do nothing,because the self-correcting mechanism will adjust the economy
• B) Sell bonds in the open market
• C) Wait,because the price level seldom changes when there is an increase in the price of oil
• D) Encourage firms to not adjust the wages they pay
• E) Buy bonds in the open market.

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Definitions:

KOH

KOH, potassium hydroxide, is a strong alkali used in industry and as a reagent in the laboratory, especially in saponification reactions.

Lithium Hydroxide

A chemical compound with the formula LiOH, used primarily as a precursor in the production of lithium greases and batteries.

Strong Base

A substance that has a high capacity to accept protons (H+) and is completely or nearly completely ionized in aqueous solution.

Weak Base

A chemical species that partially accepts protons in solution, leading to an increase in the pH of the solution.