Your Roommate Is Having Trouble Grasping How Monetary Policy Works

question 178

Multiple Choice

Your roommate is having trouble grasping how monetary policy works.Which of the following explanations could you use to correctly describe the mechanism by which the Fed can affect the economy through monetary policy? Increasing the money supply

• A)lowers the interest rate,and firms increase investment spending.
• B)causes people to spend more because they know prices will rise in the future.
• C)raises the interest rate and consumers decrease spending on durable goods.
• D)lowers the interest rate,raises the value of the dollar,lowers the prices of exports,and raises net exports.

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Definitions:

Unstimulating Environment

A setting that lacks sufficient stimuli, engagement, or challenge, potentially leading to boredom or underdevelopment.

Intellectual Disability

A state defined by major restrictions in intellectual capabilities and adaptive behavior, encompassing a wide range of daily social and practical abilities.

Moderate Intellectual Disability

A level of intellectual disability (IQ between 35 and 49) at which people can learn to care for themselves and can benefit from vocational training.

Dyslexia

A learning disorder characterized by difficulties with accurate and/or fluent word recognition, poor spelling, and decoding abilities.