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:

Shareholders

Individuals or entities that own shares in a corporation, giving them a claim on part of the company's assets and earnings.

Dividend Practices

Refers to corporate policies and strategies regarding the distribution of profits to shareholders in the form of dividends.

Earnings in Dividends

This term is not standard; likely refers to the portion of a company's earnings distributed to shareholders in the form of dividends.

Residual Dividend Policy

A strategy whereby companies pay dividends from the residual or leftover equity only after all project capital needs are met.