An expansionary (or loose) ___________ policy raises the quantity of money and credit above what it otherwise would have been and reduces interest rates, boosting aggregate demand, and thus countering recession.

Which of the following can help to explain why higher inflation may lead to currency appreciations?

A) The interest rate is not the prime target of monetary policy. B) Most central banks adjust their policy interest rates expressly so as to keep inflation in check. C) Central banks increase the money supply leading to overshooting of the exchange rate. D) Inflation will increase the purchasing power of a currency. E) The world market does not adjust their currency trade to reflect inflation.

Neighborhood florist shops, restaurants, and travel agencies are most likely organized as

a. labor unions b. corporations c. partnerships d. sole proprietorships e. stock markets