According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply will
A. lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending.
B. lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
C. lead to an increase in investment spending and an increase in real GDP which is greater than the increase in investment spending.
D. lead to a decrease in investment spending and an increase in real GDP which is greater than the decrease in investment spending.
Answer: C
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The market demand curve shows how the total quantity demanded of a good varies as the income of buyers varies, while all the other factors that affect how much consumers want to buy are held constant
a. True b. False Indicate whether the statement is true or false
Suppose that the economy is at an inflation rate such that unemployment is above the natural rate. How does the economy return to the natural rate of unemployment if this lower inflation rate persists? Use sticky-wage theory to explain your answer
Figure 10-8
In the short run, the firm in Figure 10-8 will shut down if the price falls below
a.
$8.
b.
$6.
c.
$5.
d.
$1.
Pepsi uses advertising to create the impression that Pepsi is superior to any other soft drink. Pepsi is attempting to:
A. differentiate Pepsi from other types of soft drinks. B. lower the marginal cost of producing for Pepsi. C. sell less Pepsi so they can raise the price of Pepsi. D. convince consumers that Pepsi is identical to other soft drinks.