Which One of the Following Statements Best Describes the Monetary

question 73

Multiple Choice

Which one of the following statements best describes the monetary transmission mechanism?

• A)An increase in government spending causes the AE curve to shift upwards, leading to a higher GDP.
• B)A decrease in the money supply leads to a lower interest rate, higher investment, an upward shift in the AE curve and a higher GDP.
• C)An increase in the money supply leads to a lower interest rate, higher investment, an upward shift in the AE curve and a higher GDP.
• D)A decrease in imports causes the AE curve to shift upwards, leading to a higher interest rate.
• E)An increase in personal consumption leads to an upward shift in the AE curve and thereby increases real GDP.