Considering Only Its Direct Effect on Income, the Effect of Monetary

question 113

Multiple Choice

Considering only its direct effect on income, the effect of monetary policy is that:

• A)both expansionary and contractionary policies tend to increase the trade deficit.
• B)both expansionary and contractionary policies tend to decrease the trade deficit.
• C)expansionary policy tends to increase the trade deficit and contractionary policy tends to decrease it.
• D)expansionary policy tends to decrease the trade deficit and contractionary policy tends to increase it.

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Definitions:

Agreement

One of the four elements necessary for a contract; consists of an offer made by one party, the offeror, and the acceptance of the offer by another party, the offeree.

Agent

Describes a person or entity authorized to act on behalf of another, known as the principal, in dealings with third parties.

Principal

In a contractual or fiduciary relationship, the principal is the party who authorizes an agent to act on their behalf.

Authority

The power or right to give orders, make decisions, and enforce obedience.