When Fed Policy Is Being Used to Offset a Contractionary

question 80

Multiple Choice

When Fed policy is being used to offset a contractionary gap, which of interest rates, investment, net exports and aggregate demand moves in the opposite direction from the others?​

• A)​Interest rates.
• B)​Investment.
• C)​Net Exports.
• D)​Aggregate demand..

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Definitions:

Currency

A form of currency widely accepted in a specific nation or economic setting.

Measure Of Value

A standard of value that allows the worth of various goods and services to be compared; often associated with money as a common denominator for value comparison.

Medium Of Exchange

An intermediary instrument used to facilitate the sale, purchase, or trade of goods between parties.

Liquidity Trap

A condition in which interest rates are low and savings rates are high, rendering monetary policy ineffective in stimulating economic growth.