In the best case scenario,the Federal Reserve is most successful at counteracting a negative:
A) AD shock.
B) SRAS shock.
C) LRAS shock.
D) real shock.

Question

Quizplus · Accepted Answer

The Federal Reserve is most successful at counteracting a negative AD (Aggregate Demand) shock. In this scenario, there is a sudden decrease in economic activity, leading to lower output, higher unemployment rates, and lower levels of inflation. To counteract this, the Federal Reserve can use monetary policy tools such as lowering interest rates and increasing the money supply to stimulate economic activity and increase aggregate demand. However, the effectiveness of the policy depends on the magnitude of the shock and the response of households and businesses towards the changes in interest rates and money supply.

In the Best Case Scenario,the Federal Reserve Is Most Successful