Which of the Following Statements About the Ripple Effects of Monetary

question 97

Multiple Choice

Which of the following statements about the ripple effects of monetary policy is FALSE? Monetary policy can

• A)raise the federal funds rate,thereby decreasing the quantity of money,raising the real interest rate,and decreasing investment.
• B)lower the federal funds rate,thereby increasing the supply of loanable funds,and lowering the exchange rate.
• C)lower the federal funds rate,thereby lowering the real interest rate and increasing aggregate demand.
• D)raise the federal funds rate and shift the aggregate demand curve leftward.
• E)raise the federal funds rate,thereby raising the real interest rate and increasing potential GDP.

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Definitions:

Present Value

The present worth of a sum of money or a series of cash flows expected in the future, assuming a certain rate of return.

Compounded Annually

A method of calculating interest where the interest rate is applied once per year, and each year’s interest calculation includes the interest from the previous years.

Annual Rents

Regular payments made for the use of property or land over a yearly basis.

Compound Interest Tables

Reference tables used to find the amount of compound interest earned or payable over a period of time, based on various rates and compounding frequencies.