The economy is at the equilibrium shown as point a in the above figure. To restore the economy to potential GDP, the Fed should

A) buy government securities and thereby increase aggregate supply.
B) sell government securities and thereby decrease aggregate demand.
C) buy government securities and thereby decrease aggregate demand.
D) buy government securities and thereby increase aggregate demand.
E) sell government securities and thereby increase aggregate demand.


D

Economics

You might also like to view...

Refer to Game Matrix I. What are the dominant strategies in this game?


a. A's dominant strategy is ?, and B's dominant strategy is ?.
b. A's dominant strategy is ?, but B does not have a dominant strategy.
c. B's dominant strategy is ?, but A does not have a dominant strategy.
d. Neither player has a dominant strategy.

Economics

Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because:

a. the consumption patterns in the industrial countries are highly heterogeneous. b. the trade policies of the industrial nations are more favorable than the developing countries. c. the industrial countries tend to have a higher population than the developing countries. d. the industrial countries are capital intensive countries. e. the consumption patterns in the industrial countries are more or less uniform.

Economics

When the product demand is inelastic, labor demand is

a. low b. high c. elastic d. inelastic e. nonunion

Economics

Black men earn an average of 21% less than white men. A labor economist who wants to investigate whether the differences in earnings indicate labor-market discrimination against black men should consider whether black and white men have similar (i) years of work experience. (ii) years of education. (iii) occupations. (iv) quality of education

a. (i) and (ii) only b. (iii) and (iv) only c. (ii) only d. (i), (ii), (iii), and (iv)

Economics