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.

---

Definitions:

Variable Costs

Costs that vary directly with the level of production or output.

Yearly Return

The percentage of increase or decrease in the value of an investment over a one-year period.

Maximize

To increase to the greatest possible amount or degree.

Minimize

To reduce something to the smallest possible level or amount.