with a decrease in the interest rate. If the Fed has a strong preference for stable prices relative to output, it responds to a price Select one: O a. increase; small Ob.increase; large Oc decrease; small O d. decrease; large

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A:

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A:

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A: Fed buys and sells bonds in the open market to affect money supply in the economy.

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A:

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A: Fed monitors the money supply in the economy. It manages the level of inflation in the economy.

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A:

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A: Inflation is mostly caused either by demand pull or supply push factors.