The Most Likely Short-Run Impact of an Unanticipated Decrease in the Money

question 69

Multiple Choice

The most likely short-run impact of an unanticipated decrease in the money supply is a(n)

• A)decrease in the real interest rate,which in turn reduces investment and real GDP.
• B)increase in the real interest rate,which in turn reduces investment and real GDP.
• C)increase in real output,which causes the interest rate to rise and in turn reduces investment and real GDP.
• D)decrease in real output,which causes the real interest rate to rise.

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Definitions:

Frontal Lobes

The largest of the brain’s lobes, which contain the motor cortex, Broca’s area, and the frontal association areas.

Neural Activity

The electrical and chemical processes that occur within the brain and nervous system, allowing for communication between neurons.

Reduced Volume

Pertains to a decrease in size, capacity, or amount of a physical object or an auditory level.

Hypochondriasis

A condition characterized by excessive worry about having a serious illness, despite medical reassurance.