A Decline in Investment Will Shift the AD Curve to the

question 195

Multiple Choice

A decline in investment will shift the AD curve to the

• A) left by a multiple of the change in investment.
• B) left by the same amount as the change in investment.
• C) right by the same amount as the change in investment.
• D) right by a multiple of the change in investment.

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Definitions:

Reserve Requirement

The minimum amount of reserves that banks must hold against deposits, as mandated by central banking authorities.

Money Supply

The all-encompassing amount of economic monetary assets at a designated time.

Reserve Requirements

Central bank regulations setting the minimum amount of reserves that must be held by a commercial bank.

Discount Rate

The interest rate charged to commercial banks and other financial institutions for loans received from the Federal Reserve's discount window.