Suppose an Increase in Interest Rates Causes Rising Unemployment and Falling

question 30

Multiple Choice

Suppose an increase in interest rates causes rising unemployment and falling output. To counter this, the Federal Reserve would

• A)increase government spending.
• B)increase the money supply.
• C)decrease government spending.
• D)decrease the money supply.

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Definitions:

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The acknowledgment by one state of another's sovereignty and government, establishing formal diplomatic relations.

Nonpartisan

Not biased or linked to any political party, often referring to activities or organizations that aim for fair and impartial judgment.

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refers to having the qualifications required by the constitution for holding a specific public office or position.

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An individual who was not born in the United States but has legally become a U.S. citizen through a process outlined by Congress.