Suppose an Economy Is Producing an Output Above Its Full-Employment

question 4

Multiple Choice

Suppose an economy is producing an output above its full-employment level.To return the economy to long-run equilibrium, a(n) _____monetary policy can be used, which would cause the price level to ____.

• A)expansionary; increase
• B)expansionary; decline
• C)contractionary; decline
• D)contractionary; increase

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Definitions:

Characteristic Line

A line generated in a graphical representation of the returns on a security versus the returns on the market, used to assess risk.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.

Variance

A statistical measurement of the dispersion between numbers in a data set, measuring how far each number in the set is from the mean.

Volatility

Measures the degree of variation of a trading price series over time, indicating the level of uncertainty or risk associated with the size of changes in a security's value.