An Unexpected Shift to a More Expansionary Monetary Policy Will

question 84

Multiple Choice

An unexpected shift to a more expansionary monetary policy will generally

• A) stimulate aggregate demand and real output as soon as the policy is instituted.
• B) exert its primary impact on aggregate demand and real output 6 to 15 months in the future.
• C) cause inflation in the short run, but expand real output in the long run.
• D) increase real interest rates in the short run.

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Definitions:

NPV Calculation

The process of determining the Net Present Value of a series of cash flows by discounting them to their present value using a specific rate.

Interest Charges

Costs incurred for borrowing money, calculated as a percentage of the principal amount over a given period.

Project

A planned set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.

Selling Price

The amount of money for which a product or service is sold to the customer.