The Main Objective of Contractionary Monetary Policy Is To

question 102

Multiple Choice

The main objective of contractionary monetary policy is to:

• A) decrease aggregate demand.
• B) close a recessionary gap.
• C) increase investment.
• D) raise the level of potential output.

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Definitions:

Rate of Return

The capital gain or loss realized on an investment over an allocated period, defined as a percentage of the investment’s preliminary cost.

Per Month

A time frame reference indicating occurrences or measurements within a calendar month.

Effective Annual Rate

A financial metric that represents the equivalent annual interest rate taking compounding into account, thus providing a more accurate measure of interest earned or paid over a year.

Compounded Semi-Annually

Interest on an investment is calculated and added to the principal sum of the investment two times a year.