If Restrictive Fiscal Policy Is Combined with Expansionary Monetary Policy

question 28

Multiple Choice

If restrictive fiscal policy is combined with expansionary monetary policy to reduce interest rates without changing income, then

• A)the income velocity of money should not change
• B)the income velocity of money should decrease
• C)the demand for money (M1) should not change
• D)the demand for money (M1)should decrease
• E)both money demand and velocity of M1 should decrease

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Definitions:

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A business strategy that focuses on outperforming competitors by developing a competitive advantage through factors like cost, product, or service.

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The quality of being self-assured and confident without being aggressive, in the context of communicating one's needs and opinions.

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The act of working together towards a common goal or interest.

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