Refer to the Following Figure When Answering the Following Questions

question 61

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 12.11: Change in Inflation by Month
-Consider Figure 12.11. You are Federal Reserve chairman Volcker and today's date is mid-1977. You suggest the appropriate policy would be to ________. You reevaluate your policy in mid-1979 and conclude that you ________; using the Phillips curve, you see the country is now in ________.

• A) lower taxes; failed to tame inflation; debt
• B) lower interest rates; failed at taming inflation; a recession
• C) raise interest rates; failed at taming inflation; expansion
• D) raise interest rates; succeeded in taming inflation; a recession
• E) raise taxes; succeeded in taming inflation; debt

---

Definitions:

Gross Method

An accounting practice where purchases are recorded at their gross invoice amount before any trade discounts are applied.

Net Method

An accounting practice where discounts for prompt payment are recorded and considered in the invoice price.

Premium Expense

The cost associated with purchasing an insurance policy or other financial product.

Estimated Premium Claims

The projected claims against an insurance provider that determines premium rates for policyholders.