An Expansionary Monetary Policy Is Most Likely to Produce an Inflationary

question 181

Multiple Choice

An expansionary monetary policy is most likely to produce an inflationary effect with little impact on output when the economy

• A) is near full employment and the short-run aggregate supply curve is flat.
• B) is near full employment and the short-run aggregate supply curve is steep.
• C) has substantial unemployment and the short-run aggregate supply curve is steep.
• D) has substantial unemployment and the short-run aggregate supply curve is flat.

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Definitions:

Deregulation

The process of removing government restrictions and regulations in industry to allow for more competition and efficiency in the market.

Communications Industry

A sector that encompasses companies and technologies involved in the transmission of information, including media, internet, telecommunications, and broadcasting.

Social Regulation

Rules designed to protect the health, safety, and welfare of the public, often including environmental and worker safety regulations.

Allocative Efficiency

The apportionment of resources among firms and industries to obtain the production of the products most wanted by society (consumers); the output of each product at which its marginal cost and price or marginal benefit are equal, and at which the sum of consumer surplus and producer surplus is maximized.