In the Short Run, Fiscal and Monetary Policy Cause Unemployment

question 86

Multiple Choice

In the short run, fiscal and monetary policy cause unemployment and inflation to move in opposite directions because

• A)the Fed and Congress rarely agree on policy.
• B)one controls aggregate demand, the other controls aggregate supply.
• C)both policies control only aggregate supply.
• D)both policies control only aggregate demand.

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Definitions:

Reduces Liquidity

Refers to any action or situation that decreases the ease with which assets can be converted into cash without significant loss in value.

Divestiture

Sale of assets by a company.

Merger

A corporate strategy of combining two or more companies into a single company in order to enhance competitive advantages or expand market share.

Tender Offer

Offer made by a company to the target company’s shareholders specifying a price and the form of payment.