The Keynesian Cause-And-Effect Sequence Predicts That a Decrease in the Money

question 12

Multiple Choice

The Keynesian cause-and-effect sequence predicts that a decrease in the money supply will cause interest rates to:

• A) fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.
• B) fall, boosting investment and shifting the AD curve rightward, leading to a decrease in real GDP.
• C) rise, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP.
• D) rise, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.

---

Definitions:

Acquisitions

The process of obtaining control of another company by purchasing or exchanging shares.

Incremental Value

The additional or extra value generated by making a particular business decision or taking a specific action, compared to not doing so.

Purchase Cost

The total expense incurred to acquire an asset or service, including the price and additional charges.

Target Firm

A company that is the focus of a takeover or acquisition attempt by another company.