Contractionary monetary policy is used to
Control inflation
Bridge the deflationary gap
Expand the output level
Deregulate the economy
Correct answer is A
Contractionary monetary policy is when central banks raise interest rates and reduce the money supply to avoid inflation.
The goal is to reduce inflation by limiting the amount of active money circulating in the economy.
The high rate of inflation in Nigeria can be attributed to
Increasing cost of production
The appreciation of the naira
Decreasing cost of production
High capacity utilization
Correct answer is A
Increase in the cost of production would lead to a rise in prices. And this has been a major cause of inflation in Nigeria, as plenty money would be used to purchase very few goods.
The theoretical relationship between money supply and prices is weakened by changes in the
Money supply
General price level
Velocity of money
Interest rate
Correct answer is B
No explanation has been provided for this answer.
An example of injection into the circular flow of income is
Taxes
Pensions
Imports
Exports
Correct answer is D
In the circular flow of income, injections include the sum of government spending (G), exports (X) and investments (I).
The output approach to measuring national income is based on the computation of
Final output
Factor cost
Value added
Profits earned
Correct answer is C
The output approach measures national output called gross domestic products (GDP) in terms of the values added by each of the sectors of the economy.