Agricultural Output Is a Large Part of Econland's GDP

question 106

Multiple Choice

Agricultural output is a large part of Econland's GDP. Particularly bad weather one year leads to an output that is smaller than normal, causing a shock to Econland's economy. Which of these correctly describes, from a Keynesian perspective, the impact of expansionary or contractionary monetary policy taken to address the situation?

• A) increase M1 to reduce inflation while having no impact on unemployment, or decrease M1 to reduce unemployment while having no impact on inflation
• B) increase M1 to reduce both inflation and unemployment, or reduce M1 to increase both inflation and unemployment
• C) increase M1 to reduce inflation while adding to unemployment, or decrease M1 to reduce unemployment while adding to inflation
• D) increase M1 to reduce unemployment but adding to inflation, or decrease M1 to reduce the inflation while adding to unemployment

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Definitions:

Asymmetric Fold

A geological fold where the two sides are uneven or asymmetrical, typical in areas of complex tectonics.

Subduction Zone

A region of the Earth's crust where two tectonic plates meet and one is forced below the other into the mantle, leading to volcanic activity and earthquakes.

Tilted Blocks

Geologic structures formed by the tilting of rock layers, often due to tectonic forces, creating an angle with the horizontal.

Anticlines

Upwardly convex folds in rock layers that typically have the oldest layers at their core.