If the Fed unexpectedly increases the money supply, real GDP
a. increases because the resulting increase in the interest rate leads to a decrease in investment.
b. increases because the resulting decrease in the interest rate leads to an increase in investment.
c. decreases because the resulting increase in the interest rate leads to a decrease in investment.
d. decreases because the resulting increase in the interest rate leads to an increase in investment.
e. decreases because the resulting decrease in the interest rate leads to an increase in investment.
B
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If the x-axis variable increases while the y-axis variable decreases, the variables x and y are negatively related
Indicate whether the statement is true or false
Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower's security is known as
A) barter. B) redistribution. C) financial intermediation. D) taxation.
Everything else held constant, if the sum of the required reserve ratio and the excess reserve ratio is less than one, a decrease in the currency-deposit ratio causes the M1 money multiplier to ________ and the money supply to ________
A) decrease; increase B) increase; increase C) decrease; decrease D) increase; decrease
Modern macroeconomics
A. does not do well explaining the reasons for growth B. focuses on theories of firm entry and exit from the market C. has eliminated poverty D. can be defined as the study of money