Multiple Choice
You hear that the Federal Reserve is raising interest rates. From this new information, you conclude that:
A) short-run output will fall along the IS curve, possibly pushing the economy toward recession.
B) short-run output will rise along the IS curve, possibly pushing the economy toward expansion.
C) short-run output will fall as the IS curve shifts left, possibly pushing the economy toward recession.
D) the federal government will lower taxes.
E) there will be no change in short-run output.
Correct Answer:
Verified
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