Suppose the Economy Currently Has an Inflationary Gap

question 97

Multiple Choice

Suppose the economy currently has an inflationary gap. The Fed engages in contractionary monetary policy. The impact of contractionary monetary policy will be to

• A) increase short-run aggregate supply, decrease in prices and decrease in real GDP.
• B) increase short-run aggregate supply, decrease prices and increase real GDP.
• C) decrease aggregate demand, decrease prices, and increase real GDP.
• D) decrease aggregate demand, decrease prices, and decrease real GDP.

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Definitions:

Corporate Social Responsibility

The practice of businesses taking responsibility for their impact on society and the environment, beyond regulatory compliance and profit-making.

Economic Requirements

The financial needs or conditions necessary to sustain or initiate a business, project, or standard of living.

Ethical Followership

The practice of supporting leaders and contributing to a group or organization in a manner that is consistent with ethical principles.

Ethical Challenges

Situations that pose moral dilemmas, requiring individuals or organizations to make decisions based on ethical principles.