Which of the Following Would Constitute Contractionary Monetary Policy by the Fed

question 155

Multiple Choice

Which of the following would constitute contractionary monetary policy by the Fed?

• A)​An increase in income tax rates, a cut in government spending, and an elimination of the investment tax credit
• B)​Open market sales of government securities, an increase in the discount rate, and an increase in reserve requirements
• C)​An increase in tariffs on imported goods and a decrease in foreign aid
• D)​Open market purchases of government securities, a cut in the discount rate, and an increase in reserve requirements

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Definitions:

Rawlsian Justice

A theory of distributional justice that concludes that the social contract emerging from the “original position” would call for an income distribution that would maximize the well-being of the worst-off member of society.

Risk Averse

A preference for avoiding loss over making a gain.

Marginal Utility

The extra pleasure or benefit gained from using one more unit of a product or service.

Utilitarian Justice

A principle focusing on the greatest happiness or benefit for the greatest number of people as the measure of what is just.