Other Things Equal, a Restrictive Monetary Policy During a Period

question 38

Multiple Choice

Other things equal, a restrictive monetary policy during a period of demand-pull inflation will

• A) lower the interest rate, increase investment, and reduce net exports.
• B) lower the price level, increase investment, and increase aggregate demand.
• C) increase productivity, aggregate supply, and real output.
• D) increase the interest rate, reduce investment, and reduce aggregate demand.

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Definitions:

Inventory

Goods and materials that a business holds for the ultimate goal of resale or processing in the production process.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair market value of its net assets, representing future economic benefits from unidentifiable assets.

Consolidation

The process in businesses where the financial statements of several departments or subsidiaries are combined to present as those of a single entity.

Previous Business Combination

Refers to a merger or acquisition that has occurred in the past where two or more entities combined to form a single entity.