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.

Understand the basic concept of comparative advantage and how it differs from absolute advantage.

Identify conditions under which countries should specialize in the production of certain goods and engage in trade.

Calculate opportunity cost and understand its role in determining comparative advantage.

Recognize the benefits of specialization and trade for countries involved.

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Definitions:

Ethical Action

A behavior or decision that is made in accordance with principles of right and wrong, aiming to promote good and prevent harm.

Experimentation

The process of conducting tests or trials to explore hypotheses or demonstrate practical operations and their effects.

Animals

Living organisms that typically have sensory organs, the ability to move, and the necessity to consume organic substances for survival.

Utilitarian Analysis

An assessment method grounded in utilitarianism, evaluating actions based on their consequences for the overall happiness or well-being.