If the Economy Starting at Full Employment Output Begins to Enter

question 91

Multiple Choice

If the economy starting at full employment output begins to enter into an expansion,one would expect Congress and the president to conduct:

• A) expansionary fiscal policy.
• B) expansionary monetary policy.
• C) contractionary fiscal policy.
• D) contractionary monetary policy.
• E) countercyclical monetary policy.

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Definitions:

Capital Components

The various sources of funding that a company uses to finance its operations and growth, including debt and equity.

Capital Structure

The mix of the three capital components (debt, preferred stock, and equity) used by a firm. The optimal capital structure is the structure at which stock price is maximized, all other things held equal. Also see Target capital structure.

Equity

The value of an ownership interest in property, including shareholders' equity in a company.

Tax Deductible

Expenses that can be subtracted from gross income, lowering the taxable income and thus the amount of tax owed.