If the Fed Decreases the Quantity of Money in Circulation

question 212

Multiple Choice

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

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

---

Definitions:

International Firm

A business that engages in commercial transactions across national borders.

Loss-Leader Pricing

Deliberately selling a product below its customary price, not to increase sales, but to attract customers’ attention to it in hopes that they will buy other products with large markups as well.

Dumping

The act of exporting a product at a price lower than its normal value, often with the intent of undermining local markets or competitors.

Second-Market Pricing

The practice of determining the price of goods and services based on their market value in secondary, often resale, markets.