If the Aggregate Price Level Adjusts Slowly Over Time,then an Expansionary

question 41

Multiple Choice

If the aggregate price level adjusts slowly over time,then an expansionary monetary policy lowers

• A)only the short-term nominal interest rate.
• B)only the short-term real interest rate.
• C)both the short-term nominal and real interest rates.
• D)the short-term nominal,the short-term real,and the long-term real interest rates.

---

Definitions:

Positive NPV Projects

Projects with a net present value greater than zero, indicating they are expected to generate profit over their lifetime.

Target Cash Balance

The optimal amount of cash that a company aims to hold for operational and precautionary purposes.

Carrying Costs

Expenses associated with holding or carrying inventory, including storage, insurance, taxes, and opportunity costs.

Shortage Costs

Costs associated with the unavailability of inventory or goods, leading to lost sales, backorders, or production delays.