Which of the following best describes the cause-and-effect chain of an expansionary monetary policy?
A. An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
B. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
C. A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
D. An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
Answer: A
You might also like to view...
In 2009, high-income economies with only about one eighth of the world's population produced almost three-fourths of the worlds output
a. True b. False
If the marginal cost of producing vanity license plates is virtually zero (by prison inmates with little else to do), then states would maximize their profits on plate sales at the point on a linear demand curve where
a. demand is inelastic. b. demand is elastic. c. demand is unit elastic. d. the demand curve crosses the horizontal axis.
The fiscal policy planner's job is made easier because full-employment GDP can be accurately measured
a. True b. False Indicate whether the statement is true or false
Using the below graph give the slopes of the straight lines tangent to the curve at points A, B, and C
Please provide the best answer for the statement.