If the Inflation That Results from Targeting Unemployment Becomes Unacceptably

question 4

Multiple Choice

If the inflation that results from targeting unemployment becomes unacceptably high, low inflation can be restored. Lower inflation can be obtained by ________ the growth rate of aggregate demand, by ________ money growth and by ________ interest rates.

• A) raising; slowing; raising
• B) lowering; accelerating; lowering
• C) lowering; accelerating; raising
• D) lowering; slowing; raising
• E) lowering; slowing; lowering

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Definitions:

Interest Costs

The expense incurred by an entity for borrowed funds, usually expressed as an annual percentage rate.

Long-term Debt

Financial obligations of a company or individual that are due after a period of one year or more.

Trade Credit

Debt arising from credit sales and recorded as an account receivable by the seller and as an account payable by the buyer.

Discounts

A reduction from the usual cost of something, often applied to prompt payment or to certain categories of customers.