In the Long Run, the Only Effect of Monetary Policy

question 154

Multiple Choice

In the long run, the only effect of monetary policy is on the:

• A) long-run aggregate supply.
• B) interest rate.
• C) aggregate output level.
• D) aggregate price level.

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Definitions:

Fixed Cost

Business expenses that remain constant regardless of the volume of goods or services produced, such as rent, salaries, and insurance premiums.

Switch Break-Even Point

This term refers to the point at which the cost savings or revenue from changing a system or product equals the costs associated with the change.

Variable Cost

Charges that fluctuate according to the volume of production.

Monthly Interest Rate

The interest rate for a period of one month, often used to calculate the interest on loans and financial products on a monthly basis.