A Contractionary Monetary Policy Is Most Likely to Reduce Output

question 1

Multiple Choice

A contractionary monetary policy is most likely to reduce output with little impact on inflation when the economy

• A)is near full employment and the aggregate supply curve is horizontal.
• B)is near full employment and the aggregate supply curve is vertical.
• C)has substantial unemployment and the aggregate supply curve is vertical.
• D)has substantial unemployment and the aggregate supply curve is horizontal.

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Definitions:

Connective

In logic and linguistics, a term for words or phrases that link propositions and sentences together to form coherent text.

Predicate

The part of a sentence or clause that tells something about the subject, often relating to an action or attribute.

Nonrestrictive Clause

A type of clause that provides extra information about a noun in a sentence but does not limit its meaning.

Restrictive Clause

A clause that defines or limits the meaning of the noun it modifies and is essential to the meaning of a sentence.