Suppose the Money Supply Decreases

question 111

Multiple Choice

Suppose the money supply decreases.How is GDP affected?  

• A) GDP increases because the resulting increase in the interest rate leads to a decrease in investment. 
• B) GDP increases because the resulting decrease in the interest rate leads to an increase in investment. 
• C) GDP decreases because the resulting increase in the interest rate leads to a decrease in investment. 
• D) GDP decreases because the resulting decrease in the interest rate leads to an increase in investment.

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