Tight Monetary Policy Results in a Long Period of Disinflation

question 223

Multiple Choice

Tight monetary policy results in a long period of disinflation and high unemployment if:

• A) the monetary policy is credible.
• B) nominal wages are sticky.
• C) prices are flexible.
• D) market confidence is high.

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Definitions:

State Income Tax

A tax imposed by a state on the income earned by individuals, corporations, or other legal entities within that state.

Federal Income Tax

The tax levied by the IRS on the annual earnings of individuals, corporations, trusts, and other legal entities.

Allowances

A revision of the definition referring to sums of money set aside or given for a specific purpose, such as deductions from taxable income to account for certain expenses.

State Income Tax

Taxes levied by individual states on the income earned by residents and, sometimes, non-residents within the state.