Use the Following to Answer Questions

question 140

Multiple Choice

Use the following to answer questions
Figure: Shifts in SRAS and AD
-(Figure: Shifts in SRAS and AD) If the economy is at short-run equilibrium point b because of a negative supply shock,the Fed may focus on price stability and enact a restrictive monetary policy,thus shifting the new equilibrium to point _____.As a result of this,the price level would _____ and real output would _____.

• A) a;decrease to the previous level;further decrease
• B) c;further increase;increase
• C) d;decrease;increase
• D) No monetary policy would have any effect;the equilibrium would remain at point b.

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Definitions:

Dividend Growth Rate

The rate of growth in a company's dividend payments, expressed as an annual percentage.

Expected Return

The anticipated profit or loss from an investment over a certain period of time, often expressed as a percentage.

Paid Dividends

Cash or other assets distributed to shareholders out of a corporation's earnings.

Capital Gains Yield

The increase in price of an investment, measured by the difference between the purchase price and the selling price, relative to the purchase price.