Which of the following situations is one in which the Fed will potentially

Which of the following situations is one in which the

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125) Which of the following situations is one in which the Fed will potentially pursue expansionarymonetary policy? A) Potential GDP is forecasted to be lower than equilibrium GDP.B) Aggregate demand is growing too fast to keep the economy at full employment.C) Aggregate demand is growing too slowly and the economy is in danger of producing GDPabove full employment.D) Potential GDP is forecasted to be higher than equilibrium GDP.Answer: D 125) Page Ref: 905 - 906/523 - 524 Learning Outcome: Macro - 12: Explain how monetary policy influences interest rates, aggregate demand, real GDP and inflation. 126) Which of the following characterizes the Fedʹs ability to prevent recessions? 126) Page Ref: 908 - 909/526 - 527 Learning Outcome: Macro - 12: Explain how monetary policy influences interest rates, aggregate demand, real GDP and inflation. 127) If the Fed raises its target for the federal fund rate, this indicates that 127) Page Ref: 905 - 906/523 - 524 Learning Outcome: Macro - 12: Explain how monetary policy influences interest rates, aggregate demand, real GDP and inflation. 37
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