The Correct Chain of Causation Illustrating the Changes Caused by Monetary

question 18

Multiple Choice

The correct chain of causation illustrating the changes caused by monetary policy is

• A)money, interest rates, C + I + G + (X − IM), I.
• B)money, interest rates, I, C + I + G + (X − IM).
• C)C + I + G + (X − IM), I, interest rates, money.
• D)I, C + I + G + (X − IM), money, interest rates.

---

Definitions:

American People

Citizens or residents of the United States of America.

Economic Expansion

A phase of the business cycle when the economy grows, characterized by increasing employment, economic output, and consumer spending.

Supply-Siders

Advocates of the economic theory that reducing tax rates and regulatory barriers to production lead to an increase in supply of goods and services, driving economic growth.

Tax Rates

The percentages at which income, purchases, or other financial transactions are taxed by governments.