The Short-Run Impact of an Unanticipated Shift to a More

question 21

Multiple Choice

The short-run impact of an unanticipated shift to a more restrictive monetary policy is most likely to be a reduction in

• A) prices, while real output is unaffected.
• B) the rate of unemployment.
• C) real output.
• D) the size of the budget deficit.

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Definitions:

Book Value

The value of an asset as it appears on a balance sheet, calculated as the cost of the asset minus any depreciation.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value on the balance sheet.

Disposed

Refers to the act of selling, transferring, or getting rid of an asset or property owned by an individual or company.

Gain

The increase in value of an asset or decrease in liabilities resulting in an increase in owners' equity, except those relating to contributions from owners.