When the Fed increases the money supply, the interest rate decreases. This decrease in the interest rate increases consumption and investment demand, so the aggregate-demand curve shifts to the right
a. True
b. False
Indicate whether the statement is true or false
True
You might also like to view...
If a country that fixes its exchange rate has an undervalued exchange rate, then it will ________ reserves, unless it ________ its money supply to the appropriate level
A) gain; increases B) lose; increases C) lose; decreases D) gain; decreases
Which of the following allows monopolistically competitive firms to differentiate their products from competitors in a market?
a. Licensing b. Forming cartels c. Advertising d. Patenting
To say that a price ceiling is binding is to say that the price ceiling
a. results in a shortage. b. is set below the equilibrium price. c. causes quantity demanded to exceed quantity supplied. d. All of the above are correct.
A lower real interest rate ________ investment spending and ________ consumption spending.
A. increases; decreases B. decreases; decreases C. decreases; increases D. increases; increases