If Aggregated Demand Is Growing Faster Than Potential Output, Then

question 15

Multiple Choice

If aggregated demand is growing faster than potential output, then the Federal Reserve is likely to

• A)lower interest rates because the rate of inflation is falling or is likely to fall.
• B)raise interest rates because the rate of inflation is rising or is likely to rise.
• C)raise interest rates because the rate of inflation is falling or is likely to fall.
• D)lower interest rates because the rate of inflation is rising or is likely to rise.
• E)do nothing because it is not clear how the rate of inflation will be affected.

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Definitions:

Indirectly Involved

Individuals or entities that are not directly engaged in an action but may be affected by its outcomes.

Audiences

Groups of people who are the receivers of information, messages, or performances, often considered in communications, marketing, and public speaking.

Dilemma

A situation requiring a choice between equally undesirable alternatives or presenting a challenging problem with no clear solution.

Trust

The firm belief in the reliability, truth, ability, or strength of someone or something.