Current equilibrium real GDP in the U.S. is equal to potential real GDP. A sharp increase in aggregate demand is expected during the year while productivity growth and other factors affecting aggregate supply remain unchanged. To prevent the economy from overheating the Fed should
A. engage in open market sales of government securities
B. Engage in open market purchases of government securities
C. lower the discount rate
D. lower reserve requirements
Answer: A
Microeconomics
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