If There Is an Adverse Supply Shock and the Federal

question 140

Multiple Choice

If there is an adverse supply shock and the Federal Reserve responds by increasing the growth rate of the money supply, then in the short run the Federal Reserve's action

• A)lowers both inflation and unemployment.
• B)lowers inflation but raises unemployment.
• C)raises inflation but lowers unemployment.
• D)raises both inflation and unemployment.

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Definitions:

Death Instincts

In Freudian psychology, innate drives or impulses leading towards aggression, self-destruction, and death, opposed to life-sustaining instincts.

Human Instincts

Innate, typically fixed patterns of behavior in animals or humans in response to certain stimuli.

Repression

A defense mechanism where unwanted or discomforting thoughts and memories are unconsciously pushed from the conscious mind.

Denial

A defense mechanism whereby individuals refuse to acknowledge reality or facts, often as a way to protect themselves from uncomfortable emotions or truths.