Which of the Following Is an Example of an Expansionary

question 115

Multiple Choice

Which of the following is an example of an expansionary monetary policy?

• A)Government purchases of goods and services decline.
• B)The discount rate is increased.
• C)The Fed sells U.S.government securities in the open market.
• D)The required reserve ratio is lowered.
• E)The income tax is lowered.

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Definitions:

Delphiniums

A genus of flowering plants known for their tall spikes of colorful flowers, commonly found in gardens.

Perfect Substitutes

Goods or services that can be used in exactly the same way and to the same extent, where one can completely replace the other in consumption.

Income Effect

The alteration in income for a person or the economy and the resulting influence on the demand for a certain good or service.

Substitution Effect

The economic principle indicating how consumers react to a change in price by substituting a more expensive item with a cheaper alternative.