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The Fed Model - End of Chapter Problem a. Predict how each change will affect the output gap. Make the output gap more positive Make the output gap more negative Not affect the output gap A. The Chinese government climinales the tarills it charges on goods exported from the C. A financial crisis makes banks extremely United States. reluctant to take on risky loans without charging an extremely high risk premium. B. The implementation of artificial intelligence E. The Federal Reserve raises the federal funds in manufacturing has led to faster than rale from 4% to 5%. expected productivity growth, which results in E. The federal government cuis the corporala D. Businesses' confidence about the future of decreasing production costs. lax ric, a move applauded by business the economy falls, which leads them to scrap cacculives, who say that it will make more planned investment projects. investment opportunities profitable. Answer Bank