If the Fed Was Trying to Reduce Demand-Pull Inflation, It

question 114

Multiple Choice

If the Fed was trying to reduce demand-pull inflation, it might:

• A)​sell government securities, lower reserve requirements and lower the discount rate.
• B)​sell government securities, raise reserve requirements and raise the discount rate.
• C)​sell government securities, lower reserve requirements and raise the discount rate.
• D)​buy government securities, lower reserve requirements and raise the discount rate.

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Definitions:

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely to changes in price.

Long-Run

Refers to a period during which all factors of production and costs are variable, and all possible changes in production capacity can be undertaken.

Supply Curve

Represents the relationship between the quantity of a good that producers are willing to sell and the price of the good, typically depicted as upward-sloping on a graph.

Costs Of Production

The total expenses incurred in the manufacture of a product, including direct materials, direct labor, and overhead costs.