If the Federal Reserve Chooses to Fight High Inflation with Contractionary

question 225

Multiple Choice

If the Federal Reserve chooses to fight high inflation with contractionary monetary policy and firms and consumers expect this policy to reduce inflation,which of the following would you expect to see?

• A)a downward shift of the short-run Phillips curve
• B)a reduction in the unemployment rate
• C)a decrease in the long-run aggregate supply curve
• D)an increase in inflationary expectations

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Costs that vary directly with the level of sales, such as commissions and credit card fees, as opposed to fixed selling expenses like salaries.

Specialized Machine

Equipment designed for a specific, often complex, function or process within manufacturing or production, not readily substitutable.

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The benefit gained from making particular investment or financial decisions, often leading to increased wealth or reduced costs.