If the Fed believes that real GDP is below potential GDP, it will
A) lower interest rates to shift the AD curve to the right and the IA line upward.
B) do nothing and wait for the IA line to shift and return real GDP to potential GDP at a lower inflation rate.
C) lower interest rates to shift the AD curve to the right.
D) lower interest rates to shift the IA line downward.
E) lower interest rates to shift the AD curve to the right and the IA line downward.
Correct Answer:
Verified
Q94: Exhibit 27-1 Q95: To "cool off the economy," the Fed Q96: The Fed's interest rate decisions depend on Q97: If we have a "Goldilocks economy," the Q98: Which of the following is true? Q100: When financial market analysts say that the Q101: If the Fed thinks there has been Q102: Who was the chairperson of the Federal Q103: The Federal Reserve must have Congress approve Q104: Fed officials are appointed to long terms
A)The Fed
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