Applying Contractionary Monetary Policy When the Inflation Rate Is near Zero

question 93

Multiple Choice

Applying contractionary monetary policy when the inflation rate is near zero could cause:

• A) inflation.
• B) stagflation.
• C) deflation.
• D) Monetary policy does not affect prices when the inflation rate is near zero.

---

Definitions:

Service Department Charges

Expenses allocated to the production or service departments, originating from support departments for costs incurred.

Operating Expenses

Costs associated with the normal operations of a business, excluding the costs of goods sold, such as rent, utilities, and payroll.

Total Service Department Charges

The collective costs charged by service departments within an organization for their services to other departments.

Income From Operations

The profit realized from a business's own operations, excluding income from other sources and before taxes and interest expenses.