In the New Classical Model, an Expansionary Monetary Policy Will

question 66

Multiple Choice

In the new classical model, an expansionary monetary policy will lead to a decline in aggregate output if ________.

• A) the increase in money supply is less than anticipated
• B) the increase in money supply is greater than anticipated
• C) the increase in money supply comes as a surprise
• D) the Bank of Canada announces the policy decision prior to its implementation

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Definitions:

Merchandise

Goods that are purchased for resale at a profit; the main product that a retailer sells.

Sales on Account

Transactions where goods are sold and payment is deferred to a future date; this is typically tracked through accounts receivable.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, before any purchases or sales have occurred.

Projected Sales

An estimate of the amount of revenue that a company expects to earn in a future period from the sale of goods or services.