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Author Question: Which of the following activities exposes others to risk? A) driving B) smoking C) playing golf ... (Read 29 times)

segrsyd

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on: Jun 29, 2018
Which of the following activities exposes others to risk?
 
  A) driving
  B) smoking
  C) playing golf
  D) all of the above

Question 2

When the economy is in recession, does the Fed want to raise the federal funds rate so as to increase aggregate demand and increase real GDP? Explain your answer.
 
  What will be an ideal response?


C.mcnichol98

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

When the economy is in a recession, the Fed surely wants to increase aggregate demand and hence GDP, but raising the federal funds rate is the wrong policy. A boost in the federal funds rate decreases consumption expenditure, investment, and net exports and therefore decreases aggregate demand. The proper policy for the Fed to pursue is a cut in the federal funds rate.


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