Figure 17-7 Use This Graph to Answer the Questions Below

question 80

Multiple Choice

Figure 17-7
Use this graph to answer the questions below.

-Refer to figure 17-7. If the economy starts at 5% unemployment and 5% inflation then if the Federal Reserve pursues a contractionary monetary policy, in the short run the economy moves to

• A) 3% unemployment and 5% inflation. In the long run the economy moves to 5% unemployment and 5% inflation.
• B) 3% unemployment and 5% inflation. In the long run the economy moves to 5% unemployment and 3% inflation.
• C) 7% unemployment and 3% inflation. In the long run the economy moves to 5% unemployment and 5% inflation.
• D) 7% unemployment and 3% inflation. In the long run the economy moves to 5% unemployment and 3% inflation.

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Definitions:

Outstanding Checks

Checks that have been written and recorded in the payer's ledger but not yet cashed or cleared by the bank.

Checkbook

A book containing blank checks and a register for recording checks written and deposits made.

Electronic Conveniences

Tools and services provided digitally that simplify tasks and transactions, often making daily activities more efficient through technology.

Financial Statement

A proper journal that captures the flow of financial transactions and the economic positioning of an entity, whether a business, an individual, or another type.