In the Short Run, an Unanticipated Shift to a More

question 8

Multiple Choice

In the short run, an unanticipated shift to a more restrictive monetary policy is most likely to result in

• A) a decrease in short-term interest rates.
• B) a reduction in the growth rate of real GDP.
• C) an increase in the rate of inflation.
• D) an increase in employment.

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Definitions:

Primary Market

The financial market for new securities issues where corporations sell new stocks and bonds to the public for the first time.

Equity Offering

The issuance of new shares by a company to the public or to institutional investors to raise capital.

Secondary Markets

Markets where securities are traded after being initially offered or sold in the primary market.

Stock Market Transaction

A financial operation such as buying, selling, or trading stocks that takes place in the stock market.