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:

Working Memory

A mental system that has a restricted capacity, tasked with momentarily maintaining information for processing.

Long-Term Memory

The phase or type of memory responsible for the storage of information over extended periods of time.

Sensory Memory

The briefest memory phase that enables people to maintain sensory information impressions even after the initial stimuli are no longer present.

Working Memory

The part of short-term memory that is concerned with immediate, conscious perceptual and linguistic processing.