According to Keynesians, for Monetary Policy to Have a Stimulative

question 38

Multiple Choice

According to Keynesians, for monetary policy to have a stimulative effect on GDP, a(n) :

• A) increase in the money supply lowers the interest rate in order to stimulate higher levels of investment.
• B) increase in the money supply lowers the interest rate in order to lower levels of investment.
• C) decrease in the money supply lowers interest rate in order to stimulate higher levels of investment
• D) decrease in the money supply causes the interest rate to rise in order to stimulate higher levels of investment.
• E) increase in the money supply causes the interest rate to rise in order to stimulate higher levels of investment.

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Definitions:

Exports

Goods or services sent from one country to another for sale or trade.

Quota

A trade limitation enforced by the government, restricting the quantity or financial value of products that can be exported or imported over a set timeframe.

Open-Economy Model

An economic model that considers the impact of trade and financial flows with other countries on the domestic economy.

Net Exports

The disparity between the total amount a country exports and the total amount it imports.