Suppose Policymakers Are Faced with Ending a Sustained Inflation

question 95

Multiple Choice

Suppose policymakers are faced with ending a sustained inflation.They must weigh the future benefits of ________ against the immediate costs of ________.

• A)lower inflation; administering the policy
• B)a higher rate of economic growth; reduced output
• C)lower rate of economic growth; lower inflation
• D)lower inflation; reduced output and higher unemployment
• E)a higher real GDP; lower inflation

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Definitions:

Depreciation Expense

The portion of the cost of a fixed asset that is considered consumed during its period of use by a business.

Prepaid Expenses

Costs incurred before receiving goods or services that are expected to be provided later.

Accounts Receivable

Funds that are due to a company from its customers for goods or services that have been delivered or sold but not yet paid for.

Inventories

are the raw materials, work-in-progress products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.