If There Is a Political Business Cycle and the Federal

question 36

Multiple Choice

If there is a political business cycle and the Federal Reserve supports the incumbent,then we should expect that prior to elections the Fed would

• A)raise interest rates to shift aggregate demand left.
• B)raise interest rates to shift aggregate demand right.
• C)reduce interest rates to shift aggregate demand left.
• D)reduce interest rates to shift aggregate demand right.

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Definitions:

Industrial Revolution

A period of major industrialization from the late 18th to mid-19th century that transformed mainly agrarian, rural societies in Europe and America into industrialized, urban ones.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Nobles of the Robe

French nobility who earned their titles through holding certain judicial or administrative offices, as opposed to "Nobles of the Sword" who inherited their titles through lineage.

Administrative Offices

Departments or units within an organization responsible for maintaining the daily operations and providing administrative support to facilitate the workflow.