130120110100 +If the Fed fears inflation, itbyGurA. decreases aggregate supply; sellingOB. decreases aggregate supply; buyingC. decreases aggregate demand; sellingOD. increases aggregate demand; sellingOE. increases aggregate supply; buyinggovernment securities.4AS*AS₂*****

Money supply:The Federal Reserve Bank regulates the money supply in the economy, thus controlling…

130 120 110 100 + If the Fed fears inflation, it by OA. decreases aggregate supply; selling OB. decreases aggregate supply; buying OC. decreases aggregate demand; selling D. increases aggregate demand; selling OE. increases aggregate supply; buying government securities. A AS* AS₂ *****

130 120 110 100 + If the Fed fears inflation, it by OA. decreases aggregate supply; selling OB. decreases aggregate supply; buying OC. decreases aggregate demand; selling D. increases aggregate demand; selling OE. increases aggregate supply; buying government securities. A AS* AS₂ *****

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 1CQQ

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Question

130
120
110
100 +
If the Fed fears inflation, it
by
Gur
A. decreases aggregate supply; selling
OB. decreases aggregate supply; buying
C. decreases aggregate demand; selling
OD. increases aggregate demand; selling
OE. increases aggregate supply; buying
government securities.
4
AS*
AS₂
*****

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The Fed is fighting recession and it happens to overstimulate the economy. If the expected inflation rate rises above the 2 percent goal, what is the cost of returning the inflation rate back to its goal? The cost of returning the inflation rate back to its goal is _______. A. an inflationary gap and an even higher inflation rate than initially B. unemployment below the natural unemployment rate C. a decrease in potential GDP and aggregate supply D. a recessionary gap and a higher unemployment rate Thanks!
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