A contractionary monetary policy is most likely to reduce output with little impact on inflation when the economy
a. is near full employment and the aggregate supply curve is horizontal.
b. is near full employment and the aggregate supply curve is vertical.
c. has substantial unemployment and the aggregate supply curve is vertical.
d. has substantial unemployment and the aggregate supply curve is horizontal.
d
You might also like to view...
How do the Fed's actions influence real GDP and how long does it take for real GDP to respond to the Fed's policy changes?
What will be an ideal response?
Banks will keep excess reserves when
A. they do not foresee profitable opportunities to make loans. B. business conditions generally are depressed. C. they do not foresee opportunities to make secure loans. D. All of these responses are correct.
Which of the following statements is false?
A. Bonuses are paid in addition to base salary. B. Bonuses are frequently linked to performance. C. Free-riding can result from a compensation scheme that gives competitive individual bonuses. D. Free-riding can result from profit sharing. E. Profit sharing redistributes profits back to the workers.
Which of the following is not a possible explanation as to why wage inequality increased markedly over the last 40 years in the United States?
A. There was an increase in the supply of low-skill workers, particularly through immigration. B. Recent technological changes have been complementary to skilled labor while substituting for unskilled labor. C. Competition from international economies has increased demand for highly productive workers. D. Institutional changes in the United States such as a steady decline in union coverage and a falling real minimum wage have led to changes in the wage distribution. E. Federal legislation allowed employers to legally engage in more racial discrimination.