During an Inflationary Period, Policy Makers Who Use the AS/AD

question 70

Multiple Choice

During an inflationary period, policy makers who use the AS/AD model would probably recommend an open market:

• A)sale of government securities that reduces interest rates.
• B)purchase of government securities that reduces interest rates.
• C)sale of government securities that raises interest rates.
• D)purchase of government securities that raises interest rates.

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Definitions:

Dividends

Distributions made to shareholders by a company, often from its earnings.

Par Common Stock

The nominal or face value assigned to common stock shares in the charter of a corporation.

Cumulative Preferred Stock

A type of preferred stock where dividends accrue if not paid in a given year and must be paid out before any dividends can be distributed to common stockholders.

Issued

Refers to the act of distributing or making available something, such as stocks or bonds, to the public for the first time.