If a Negative Aggregate Demand Shock Occurs and Monetary Policy

question 27

Multiple Choice

If a negative aggregate demand shock occurs and monetary policy is not credible then ________.

• A) economic activity will decrease
• B) the equilibrium interest rate will rise
• C) there will be a corresponding autonomous increase in inflation
• D) none of the above

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Definitions:

Industry Share

A measure of the proportion of the market that a company or a sector holds relative to its competitors, usually expressed as a percentage.

Labor Force

All the members of a particular organization or population who are able to work, viewed collectively.

Employee Health Care

Programs and services provided by employers to maintain and improve the health and well-being of their employees.

Workforce

The pool of available individuals working or capable of working within an organization or economy.