Suppose the Fed increases the money supply. As a result of this, people deposit excess funds into their bank accounts, causing banks to have excess reserves. As a result, the banks lower the interest rates that they charge on loans, and investment rises, causing an increase in aggregate spending. This is known as a(n)

A. indirect effect of monetary policy.
B. direct effect of monetary policy.
C. indirect effect of fiscal policy.
D. direct effect of fiscal policy.


Answer: A

Economics

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According to economist Emmanuel Saez, between 1993 and 2010, the incomes of the richest 1 percent grew by ________, and the other 99 percent grew by ________ on average.

A. 58 percent; 64 percent B. 5.8 percent; 6.4 percent C. 58 percent; 6.4 percent D. 5.8 percent; 64 percent

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Investment spending is a leakage from the circular flow model.

Answer the following statement true (T) or false (F)

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