Which of the Following Describes a Part of the Transmission

question 17

Multiple Choice

Which of the following describes a part of the transmission mechanism?

• A)a change in real money balances causes a portfolio disequilibrium and asset holders' reactions influence interest rates
• B)an income tax rate cut stimulates private spending but the resulting interest rate increase dampens the income expansion
• C)an increase in government spending is partially offset by the crowding out of private investment
• D)the central bank undertakes open market purchases and the resulting interest rate increase encourages people to save more
• E)both B and C

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Definitions:

Normal Distribution

A type of statistical distribution where data forms a symmetrical bell-shaped curve, with most values clustering around a central mean value.

Illusory Correlation

The cognitive mistake of perceiving a relationship between two variables even when none exists, often leading to erroneous conclusions or stereotypes.

Negative Correlation

A statistical relationship between two variables in which one variable increases as the other decreases.

Positive Correlation

A relationship between two variables where both variables move in the same direction.