Asked by
TENNILLE JONES
on Nov 11, 2024
Verified
To eliminate a recessionary gap,the Fed can:
A) increase the money supply as it will increase the interest rate and investment.
B) increase the money supply as it will decrease the interest rate and increase investment.
C) decrease the money supply as it will increase the interest rate and investment.
D) decrease the money supply as it will decrease the interest rate and investment.
E) decrease the money supply as it will increase the interest rate and decrease investment.
Recessionary Gap
A situation in macroeconomics where the actual output of an economy is less than its potential output, leading to unemployment and underutilized resources.
Money Supply
The aggregate financial amounts present in an economy at an identified time.
Interest Rate
The cost of borrowing money expressed as a percentage of the amount borrowed or the return on investment.
- Absorb the key elements of monetary policy and its influence on the comprehensive demand and supply.
- Investigate the effectiveness of monetary policy in closing gaps associated with recession and inflation.
Verified Answer
KJ
Learning Objectives
- Absorb the key elements of monetary policy and its influence on the comprehensive demand and supply.
- Investigate the effectiveness of monetary policy in closing gaps associated with recession and inflation.
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