If Businesses and Consumers Become Pessimistic,the Federal Reserve Can Attempt

question 18

Multiple Choice

If businesses and consumers become pessimistic,the Federal Reserve can attempt to reduce the impact on the price level and real GDP by

• A)increasing the money supply,which raises interest rates.
• B)increasing the money supply,which lowers interest rates.
• C)decreasing the money supply,which raises interest rates.
• D)decreasing the money supply,which lowers interest rates.

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Definitions:

Evaluating

The process of assessing or appraising the performance, value, or condition of an entity or component.

Capital Investment Analysis

The process of assessing the viability and potential return on investments in long-term assets.

Fixed Assets

Physical resources that are owned and used by a business and are permanent or have a long life; long-term or relatively permanent tangible assets such as equipment, machinery, buildings, and land that are used in normal business operations.

Investments

Assets purchased for the purpose of generating income or profit, including stocks, bonds, and real estate.