Which of the Following Best Describes How Expansionary Monetary Policy

question 118

Multiple Choice

Which of the following best describes how expansionary monetary policy affects the aggregate demand curve in the aggregate demand-aggregate supply model?

• A) Expansionary monetary policy directly pulls money out of the loanable funds market.This lowers the interest rate,which provides a larger incentive for firms to invest.Investment is a component of aggregate demand,so this shifts aggregate demand to the right.
• B) Expansionary monetary policy directly puts money into the loanable funds market.This lowers the interest rate,which provides a larger incentive for firms to invest.Investment is a component of aggregate demand,so this shifts aggregate demand to the right.
• C) Expansionary monetary policy directly puts money into the loanable funds market.This raises the interest rate,which provides a larger incentive for firms to invest.Investment is a component of aggregate demand,so this shifts aggregate demand to the right.
• D) Expansionary monetary policy directly puts money into the loanable funds market.This lowers the interest rate,which provides a larger incentive for firms to invest.Investment is a component of aggregate demand,so this shifts aggregate demand to the left.
• E) Expansionary monetary policy directly pulls money out of the loanable funds market.This raises the interest rate,which provides a larger incentive for firms to invest.Investment is a component of aggregate demand,so this shifts aggregate demand to the left.

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Definitions:

Recycling

The process of converting waste materials into new materials and objects, as a way to reduce consumption of fresh raw materials.

Supplier Selection

The process of evaluating and choosing suppliers based on criteria such as price, quality, reliability, and service to best meet an organization’s needs.

Environmental Impact

The effect of human activities or industrial processes on the natural environment, including pollution and resource depletion.

Recyclable Components

Parts of a product that can be processed and used again in the manufacturing of new products, reducing the need for raw materials.