Which of the Following Is True

question 73

Multiple Choice

Which of the following is true?
I. The quantity theory predicts that in the long run the inflation rate equals the money growth rate minus the growth rate of potential GDP.
II. If the Fed decreases the federal funds rate, aggregate demand increases.
III. The Fedʹs monetary policy works by shifting the short-run aggregate supply curve.

• A) II and III
• B) I, II and III
• C) I and II
• D) I and III

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Definitions:

Specific Tariff

A specific tariff is a fixed fee imposed by a government on each unit of imported or exported goods, rather than a percentage of their value.

Loss

A situation where expenses exceed revenues, resulting in negative financial performance.

Ad Valorem Tariff

A tax placed on goods based on a percentage of the goods' value.

Import Quota

An import quota is a government-imposed limit on the quantity or monetary value of a particular good that can be imported into a country within a specified time frame.