By Offering Credit and Financing Through Its GMAC Division,General Motors

question 34

Multiple Choice

By offering credit and financing through its GMAC division,General Motors is trying to help consumers

• A) expand future buying power at the expense of current buying power.
• B) expand disposable income at the expense of discretionary income.
• C) expand current buying power at the expense of future buying power.
• D) expand both disposable income and wealth.
• E) decrease both disposable and discretionary income.

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Definitions:

Monetary Neutrality

The theory that changes in the money supply only affect nominal variables (like prices) and not real variables (like output) in the long run.

Phillips Curve

An economic concept depicting an inverse relationship between the rate of unemployment and the rate of inflation in an economy over time.

Friedman and Phelps

Refers to the contributions of Milton Friedman and Edmund Phelps in economics, particularly their work on the natural rate of unemployment and the expectations-augmented Phillips Curve, disputing the long-term trade-off between inflation and unemployment.

Government Expenditures

The total amount of money spent by the government on goods, services, and public projects.