In Order to Prevent a Wage- Price Spiral from Emerging

question 169

Multiple Choice

In order to prevent a wage- price spiral from emerging when the economy is producing above full employment, the monetary authority could:

• A) contract the money supply.
• B) lower taxes.
• C) expand the money supply.
• D) increase government spending.

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Definitions:

Benefit

The advantage or profit gained from something.

Nash Equilibrium

A condition in strategic games, indicating that each participant's chosen strategy maximizes their payoff, given the strategies selected by others.

Payoff

The outcome of a decision or strategy, often quantified in terms of profit or loss.

Strategy

A plan of action designed to achieve a long-term or overall aim, often used in business, marketing, military, and game theory contexts.