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If the Economy Is at Potential Output and the Fed

question 167

Multiple Choice

If the economy is at potential output and the Fed decreases the money supply so that actual output is less than potential output, eventually nominal wages will_____ and short-run aggregate supply will _____.


Definitions:

Conglomerate Acquisition

A conglomerate acquisition occurs when a company buys another company in a completely unrelated business sector, aiming for diversification of business interests.

Poison Pill

A defensive strategy used by companies to prevent or discourage hostile takeovers by making the company less attractive to the acquirer.

Golden Parachute

Substantial benefits given to top executives if the company is taken over by another firm, serving as a deterrent for unwanted takeovers.

Unfriendly Takeover

An attempt by one company to acquire control of another company without the consent or cooperation of its management or board of directors.

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