Which One of the Following Statements Is True

question 45

Multiple Choice

Which one of the following statements is true?

• A) Monetary policy includes adjusting interest rates and determining the level of government taxation.
• B) Inflation has little, if any, impact on the economy or the financial markets.
• C) Both consumer spending and business investment are key components of the economy.
• D) Restrictive fiscal policy tends to increase economic activity.

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Definitions:

Tax Rebate

A refund on taxes when the tax liability is less than the taxes paid.

Interest Rate

The percentage of a sum of money charged for its use, usually expressed as an annual percentage.

Net Capital Outflow

The difference between the domestic purchase of foreign assets and the foreign purchase of domestic assets.

Loanable Funds

The total amount of funds available in the financial markets for borrowing, which determines the market interest rates.