If a Contractionary Monetary Policy Lowers the Price Level by More

question 29

Multiple Choice

If a contractionary monetary policy lowers the price level by more than expected,it raises the real value of consumer debt. This reduces consumer expenditure through

• A)the bank lending channel.
• B)Tobin's q.
• C)the traditional interest-rate channel.
• D)the household liquidity effect.

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Definitions:

Section 1202

A section of the Internal Revenue Code that provides a tax benefit for small business stockholders by excluding part of the gain realized on the sale or exchange of qualified small business stock held for more than five years.

Qualified Small Business Stock

A special designation for shares in certain small businesses that can offer investors tax advantages under specific conditions.

Long Term Capital Gain

Profit earned from the sale of an asset held for more than a year, subjected to preferential tax rates.

Tax Bracket

A range of income subject to a particular tax rate under a progressive tax system, where higher income levels are taxed at higher rates.