If the Economy Experiences an Inflationary Gap, a Contractionary Monetary

question 71

Multiple Choice

If the economy experiences an inflationary gap, a contractionary monetary policy will _______ interest rates and _______ the bond prices.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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Definitions:

Firm Sales

Firm sales refer to the total amount of revenue that a company generates from the sale of its goods or services within a specific time frame.

Oligopolists

Firms in a market structure dominated by a small number of large companies, having significant control over their industry's prices and policies.

Pure Monopolists

Firms that are the sole providers of a product or service in a market, facing no competition.

Retained Earnings

The portion of a company's profits that is held or retained and not paid out as dividends to shareholders, often used for investing in business growth.