Suppose That the Economy Is Producing Below Potential GDP and the Fed

question 226

Multiple Choice

Suppose that the economy is producing below potential GDP and the Fed implements the correct change in monetary policy,but not until after the economy has passed the trough of the recession.Then

• A)the Fed's contractionary policy will result in too large of a decrease in GDP.
• B)the Fed's contractionary policy will result in too small of a decrease in GDP.
• C)the Fed's expansionary policy will result in too small of a decrease in GDP.
• D)the Fed's expansionary policy will result in too large of an increase in GDP.

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Definitions:

Situational Variables

External factors that can influence the outcome of experiments and the behavior of individuals in specific contexts.

Self-regulatory Systems

The mechanisms and processes by which individuals control and direct their thoughts, feelings, and actions in pursuit of their goals.

Rewards and Punishments

Behavioral tools used to reinforce desirable behaviors and discourage undesirable ones.

Self-efficacy Expectations

Beliefs in one's ability to succeed in specific situations or accomplish a task, which can play a major role in how goals, tasks, and challenges are approached.