Which of the Following Best Describes the Cause-Effect Chain of a Restrictive

question 204

Multiple Choice

Which of the following best describes the cause-effect chain of a restrictive 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, decrease investment spending, and increase aggregate demand and GDP.

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Definitions:

Majority Rule

A decision-making principle where the preferences of more than half of the members of a group determine the decision made by that group.

Groupthink

A phenomenon in which the desire for harmony or conformity in a group results in an incorrect or deviant decision-making outcome.

Cohesive Groups

Cohesive groups are characterized by strong bonds and a sense of unity among members, often leading to higher levels of group satisfaction and effectiveness.

Group Consensus

A general agreement reached by a group as a whole, where most members support the decision even if it's not their first choice.