When a Major Negative Aggregate Demand Shock Hits the Economy,a

question 238

Multiple Choice

When a major negative aggregate demand shock hits the economy,a central bank can "maintain market confidence" by:

• A) raising the Federal Funds rate.
• B) buying stocks in the stock market.
• C) selling Treasury securities in the open market.
• D) promising to increase the growth rate of money if the economy worsens further.

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Definitions:

Parasympathetic Nervous System

The division of the autonomic nervous system that calms the body, conserving its energy.

Somatic Nervous System

The division of the peripheral nervous system that controls the body’s skeletal muscles. Also called the skeletal nervous system.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, responsible for processing and sending out neural signals.

Peripheral Nervous System

The part of the nervous system that consists of the nerves and ganglia outside of the brain and spinal cord.