Monetary Policy in Mokania

question 52

Multiple Choice

Monetary Policy in Mokania
Mokania has had inflation of 15% for many years. Mokania establishes a new central bank, the Bank of Mokania, with the hopes of reducing the inflation rate.

-Refer to Monetary Policy in Mokania.The Bank of Mokania publicizes its intent to reduce the inflation rate to 5%.If it is successful in doing so but people had expected inflation to fall only to 10%,then

• A)unemployment rises but it would have risen by more if people had expected inflation to be 6%.
• B)unemployment rises but it would have risen by less if people had expected inflation to be 6%.
• C)unemployment falls but it would have fallen by more if people had expected inflation to be 6%.
• D)unemployment falls but it would have fallen by less if people had expected inflation to be 6%.

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Definitions:

Income Statement

A financial document that reports a company's financial performance over a specific period, detailing revenues, expenses, and net income or loss.

Common Stock

Common stock represents units of ownership in a corporation, granting holders voting rights and a share in the company's profits, often through dividends.

Ending Balance

The amount in an account at the end of an accounting period after all debits and credits have been accounted for.

Asset (A)

Resources owned by a company that have economic value and can provide future benefits.