Which of the Following Correctly Indicates a Potential Path for the Transmission

question 127

Multiple Choice

Which of the following correctly indicates a potential path for the transmission of expansionary monetary policy to the goods and services market?

• A) Higher real interest rates will lead to a decrease in both business investment and consumer purchases of durable items, causing a decrease in aggregate demand.
• B) Lower interest rates lead to a depreciation in the foreign exchange value of the dollar, an increase in net exports, and an expansion in aggregate demand.
• C) Higher interest rates will tend to increase asset prices, leading to a decrease in wealth that will decrease consumer spending and aggregate demand.
• D) A reduction in the general level of prices will increase the disposable income of households and aggregate demand.

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Definitions:

Goslings

Young geese; in a developmental context, the term often illustrates principles of imprinting and early learning.

Ducklings

Ducklings are the young of ducks; in psychology, they are often used in imprinting studies, which show how they can form attachments during a critical period early in life.

Blisspoint

The free operant level of two responses.

Set Point

A set point in physiological and psychological contexts refers to a theoretical value that the body or mind aims to maintain through various regulatory mechanisms, such as body temperature or weight.