If Spending Is Not Responsive to Changes in the Interest

question 34

Multiple Choice

If spending is not responsive to changes in the interest rate, then

• A) the Fed is "impotent."
• B) tax policy is "impotent."
• C) fiscal policy is "impotent."
• D) the Fed is "potent."

---

Definitions:

Captive Animals

Animals that are kept in a controlled environment, such as zoos or research facilities, and not living in the wild.

Perceived Loss

The feeling or belief that one has lost something valuable, which can include tangible items or intangible aspects like status or emotional well-being.

Reduced Cortisol

Refers to a decrease in the levels of cortisol, a steroid hormone that responds to stress and modulates metabolism in the body.

Internal Locus

A psychological term referring to individuals who believe they have control over the outcomes of their actions and life events.