Which of the Following Best Describes the Cause-Effect Chain of an Expansionary

question 378

Multiple Choice

Which of the following best describes the cause-effect chain of an expansionary monetary policy?

• A) A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
• B) A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
• C) An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
• D) An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.

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