If There Is an Increase in the Money Supply, in the Short

question 247

Multiple Choice

If there is an increase in the money supply, in the short run

• A) the interest rises. It takes several weeks for spending to fully respond to this change.
• B) the interest rises. It takes several months for spending to fully respond to this change.
• C) the interest falls. It takes several weeks for spending to fully respond to this change.
• D) the interest falls. It takes several months for spending to fully respond to this change.

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Definitions:

Net Income

The amount of money left after subtracting all expenses, taxes, and costs from total revenue.

Variable Cost

A cost that varies depending on the level of output or activity, such as materials or labor costs in manufacturing.

Fixed Cost

A periodic cost that does not vary with production volume or sales.

Variable Costs

Costs that change in proportion to the level of production or sales in a business.