Restrictive Monetary Policy Will Eventually Affect the Upward-Sloping AS-Curve Since

question 48

Multiple Choice

Restrictive monetary policy will eventually affect the upward-sloping AS-curve since

• A)higher interest rates will increase the cost of production
• B) higher interest rates will reduce the capital stock which will, in turn, reduce potential GDP
• C) the resulting unemployment will cause downward pressure on nominal wages, so the cost of production will decrease
• D)real wages will decline while nominal wags remain constant
• E)firms will start laying off workers in anticipation of a decline in aggregate demand

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Definitions:

Work Units

Groups or teams within an organization designated to perform specific tasks or functions.

Organisational Strength

The unique capabilities or advantages that give an organization a competitive edge or help it achieve its objectives.

Purpose

The reason for which something is done or created, or for which something exists; often refers to the sense of resolve or determination with which an individual or group undertakes a task.