The AS/AD Model Implies That Monetary Policy Should Be Used

question 61

Multiple Choice

The AS/AD model implies that monetary policy should be used to:

• A)make adjustments so that savings equal investment.
• B)keep the money supply growing at a constant rate.
• C)keep the interest rate constant.
• D)keep the price level constant.

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Definitions:

Return on Equity

Return on Equity (ROE) measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested.

Net Income

This is the amount of earnings left after all expenses and taxes have been subtracted from revenue.

Average Common Stockholders' Equity

A financial metric calculated as the average equity held by common stockholders over a period, typically used in performance analysis.

Return on Equity

A measure of financial performance calculated by dividing net income by shareholder equity, indicating how effectively a company uses invested capital to generate profit.