If the Fed Increases the Quantity of Money in Circulation

question 232

Multiple Choice

If the Fed increases the quantity of money in circulation, interest rates _____, investment spending _____, and the aggregate demand curve shifts to the _____.

• A) decrease; increases; right
• B) increase; increases; right
• C) decrease; increases; left
• D) increase; decreases; left

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Definitions:

Vertical Line Test

A method used to determine if a graph represents a function by checking if any vertical line crosses the graph more than once.

Function

A relationship between two sets that associates every element of the first set with exactly one element of the second set.

Vertical Line Test

A method used in determining if a graph represents a function, stating that if a vertical line intersects the graph more than once, then the graph is not a function.

Function

An interaction between a collection of inputs and a series of allowed outputs, where each input has a unique output association.