higher interest rate _____ consumption, investment, and _____, which _____ aggre

Question

higher interest rate _____ consumption, investment, and _____, which _____ aggregate demand.

Question 5 options:

a)

b)

c)

d)

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Question 6 (1 point)

Question 6 options:

a)

b)

c)

d)

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Question 7 (1 point)

Question 7 options:

a)

b)

c)

d)

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Question 8 (1 point)

If the Federal Reserve wishes to raise the interest rate, what does it need to do?

Question 8 options:

a)

b)

c)

d)

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Question 9 (1 point)

The twin goals of monetary policy are:

Question 9 options:

a)

b)

c)

d)

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Question 10 (1 point)

If monetary policy is tight:

Question 10 options:

a)

b)

c)

d)

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Question 11 (1 point)

A _____ is the most difficult for the Federal Reserve to address because it causes both inflation and unemployment to rise.

Question 11 options:

a)

b)

c)

d)

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Question 12 (1 point)

If the economy is currently operating below long-run output, what should the Federal Reserve do?

Question 12 options:

a)

b)

c)

d)

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Question 13 (1 point)

Loosening monetary policy causes interest rates to ____, and consumption and investment to ____.

Question 13 options:

a)

b)

c)

d)

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Question 14 (1 point)

A lower interest rate increases consumption, investment, and _____, which _____ aggregate demand.

Question 14 options:

a)

b)

c)

d)

a)

increases; exports; increases

b)

increases; imports; increases

c)

decreases; exports; decreases

d)

decreases; imports; decreases

Explanation / Answer

5. The right answer is option c.

Explanation: When the interest rate is high, people borrow less. Less borrowing leads to lower consumption and investment. Lower investment reduces production and output, which reduces exports. The combined result is that the Aggregate Demand (AD) decreases.

decreases; exports; decreases

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