Which Statement Correctly Describes How Monetary Policy Affects the Economy

question 28

Multiple Choice

Which statement correctly describes how monetary policy affects the economy?

• A) House sales are down, due to increases in the money supply.
• B) The extra money pumped into the economy by the central bank is increasing exports.
• C) The decreased supply of money is helping sell exports abroad.
• D) Businesses are investing more, now that monetary policy has attacked the inflationary gap.
• E) The extra money pumped into the economy by the central bank is reducing jobs.

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Definitions:

Profit-Maximizing

Profit-maximizing is the process or strategy employed by businesses to adjust their production and sale operations to achieve the highest possible profit.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, engaged in commercial, industrial, or professional activities.

Operating

The act of conducting business or maintaining functions within an organization or system.

Corporate Hierarchy

The arrangement of individuals within a corporation according to power, status, and job function, often visualized as a pyramid with the highest-ranking officer at the top.