The Best Description of the Cause-And-Effect Chain of a Contractionary

question 101

Multiple Choice

The best description of the cause-and-effect chain of a contractionary monetary policy in the short run is that it will

• A)lower the interest rate,increase investment spending,and increase real GDP.
• B)raise the interest rate,decrease investment spending,and decrease real GDP.
• C)lower the interest rate,lower investment spending,and decrease real GDP.
• D)raise the interest rate,decrease investment spending,and increase real GDP.
• E)raise the interest rate,increase investment spending,and decrease real GDP.

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control them.

Common Stock

Equities representing ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Equity Method

An accounting technique used to record investments in other companies, where the investment's value is adjusted to reflect the investor's share of the company's post-acquisition earnings or losses.