Contractionary Monetary Policy Causes a Short-Run _____ in Interest Rates

question 10

Multiple Choice

Contractionary monetary policy causes a short-run _____ in interest rates in the short run and _____ in interest rates in the long run.

• A) increase; an increase
• B) increase; no change
• C) decrease; no change
• D) decrease; a decrease

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Definitions:

Deductive Reasoning

An approach to theory development that begins with a description of desired outcomes and leads to principles and, in turn, specific actions that should result in those desired outcomes.

Conceptual Framework

A system of interrelated objectives and fundamentals that guides the development of accounting standards.

Inductive Reasoning

An approach to theory development that begins with observations of practice and leads to inferences about principles, assumptions and objectives.

Credit Balance

An accounting term describing a situation where the credits in an account exceed the debits, often indicating a liability or revenue.