Question 1
In a binding situation, the Fed rule calls for
◦ a negative interest rate.
◦ a positive interest rate.
◦ a negative price level.
◦ a negative output level.
Question 2
In a binding situation, a decrease in the
Z factors
◦ shifts the
AD curve to the right.
◦ shifts the
AD curve to the left.
◦ does not shift the
AD curve.
◦ causes the
AD curve to become horizontal.