A Contractionary Monetary Policy That Has Been Imposed to Reduce

question 41

Multiple Choice

A contractionary monetary policy that has been imposed to reduce a sustained inflation will most likely

• A)have no effect on the short-run level of GDP and unemployment.
• B)not control inflation,since money supply changes have little or no effect on the price level.
• C)produce long-lasting unemployment if wages adjust rapidly.
• D)lead to a recession that is long and severe,under any circumstances.
• E)lead to a recession which will be short if inflation expectations adjust rapidly and accurately.

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Definitions:

Buy Puts

An investment strategy that involves purchasing put options, contracts that give the buyer the right, but not the obligation, to sell a security at a specified price before the contract expires.

Rational Investor

An individual or entity that makes investment decisions based on logical analysis, aiming to maximize returns while minimizing risks.

Expiration Date

The date on which an option, futures contract, or similar financial instrument becomes invalid and the right to exercise it ceases.