A Contractionary Monetary Policy Combined with an Expansionary Fiscal Policy

question 70

Multiple Choice

A contractionary monetary policy combined with an expansionary fiscal policy will lead to

• A)an increase in output and an ambiguous effect on the interest rate.
• B)an increase in output and an increase in the interest rate.
• C)an ambiguous effect on output and an increase in the interest rate.
• D)an ambiguous effect on output and an ambiguous effect on the interest rate.

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Definitions:

Price Supports

Government interventions to maintain the market prices of agricultural products above equilibrium levels, often through purchasing surpluses or subsidizing costs.

Environmental Pollution

involves the contamination of the natural environment, leading to harmful effects on living beings and ecosystems.

Organic Farming

A method of farming that relies on natural substances and processes to produce crops and livestock, avoiding synthetic fertilizers and pesticides.

Inoculation Programs

Public health initiatives designed to vaccinate populations against infectious diseases to prevent their spread and protect public health.