The Fed Initiates a Contractionary Monetary Policy That Is Correctly

question 208

Multiple Choice

The Fed initiates a contractionary monetary policy that is correctly anticipated by economic agents in the economy. The result is

• A)decreased prices, but no change in real GDP.
• B)decreased prices and decreased real GDP in the short run, but only decreased prices in the long run.
• C)decreased real GDP in the short run and decreased prices in the long run.
• D)decreased real GDP and prices in both the short run and the long run.

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Definitions:

Activity Rates

Charges used to assign costs to cost objects, based on activities that drive costs in activity-based costing.

Budgeted Cost

An estimate of the expenses for various operations, projects, or activities planned for a specific period.

Activity Cost Pools

A grouping of all costs associated with a particular activity, used in activity-based costing to allocate costs more accurately to products or services.

Plantwide Overhead Allocation

A method of allocating indirect costs to products based on a single overhead rate used throughout an entire plant or company.