When Output Is Below Potential and the Policy Rate Has

question 37

Multiple Choice

When output is below potential and the policy rate has hit the floor of zero,if policymakers do nothing,output will ________ and inflation will ________.

• A)rise;fall
• B)fall;fall
• C)fall;rise
• D)rise;rise

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Definitions:

Gross Margin Ratio

A financial metric indicating the percentage of sales revenue remaining after deducting the cost of goods sold, serving as a measure of a company's production efficiency and pricing strategy.

Operating Activity

Activities that constitute the primary or core business functions, including sales and service provision, and their related expenses, generating most of the company's cash flows.

Cash Flows

Cash flows refer to the movement of money into and out of a business, indicative of its liquidity, operational efficiency, and financial health.

Cash Receipts

Cash receipts refer to the collection of money, including checks, cash, and credit card charges, received by a business for goods or services it has sold.