Monetary Policy Designed to Counteract a Reduction in Aggregate Demand

question 47

Multiple Choice

Monetary policy designed to counteract a reduction in aggregate demand might include

• A)an increase in the money stock.
• B)a sharp increase in short-term interest rates.
• C)increased government infrastructure spending.
• D)an increase in individual income tax rates.

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Definitions:

Debits

Entries that increase asset or expense accounts, or decrease equity, liability, or revenue accounts, typically noted on the left side of an accounting ledger.

Credits

In accounting, credits refer to an entry on the right side of a double-entry bookkeeping system that increases liabilities, equity, or revenue or decreases an asset or expense account.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure a company's bookkeeping system is mathematically correct.

Ledger Accounts

Individual records that summarize transactions related to a specific account within the general ledger.