From an Initial Long-Run Equilibrium,if Aggregate Demand Grows Faster Than

question 254

Multiple Choice

From an initial long-run equilibrium,if aggregate demand grows faster than long-run and short-run aggregate supply,then Congress and the president would most likely

• A)decrease the required reserve ratio.
• B)decrease government spending.
• C)decrease oil prices.
• D)decrease tax rates.

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Definitions:

Market Portfolio

A theoretical bundle of all investable assets in the market, with each asset weighted according to its market capitalization.

Risk-Free Asset

An investment with a certain return and no risk of financial loss, typically represented by government securities.

Risk Level

The degree of uncertainty and/or potential financial loss inherent in an investment decision.

Treasury Bills

Short-term government securities issued at a discount from face value and mature in a year or less, representing a safe and liquid investment option.