In the Short Run, a Decrease in the Money Supply

question 64

Multiple Choice

In the short run, a decrease in the money supply causes interest rates and aggregate demand to do what?

• A) It causes interest rates to increase and aggregate demand to shift right.
• B) It causes interest rates to increase and aggregate demand to shift left.
• C) It causes interest rates to decrease and aggregate demand to shift right.
• D) It causes interest rates to decrease and aggregate demand to shift left.

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Definitions:

Constant Temperature

A condition or process that occurs at an unchanging temperature, regardless of other varying factors.

Chemical Reaction

A process that involves rearrangement of the molecular or ionic structure of a substance, as opposed to a change in physical form or a nuclear reaction.

Constant Pressure

A condition or process in which the pressure remains unchanged over time.

Equilibrium

A state in which opposing forces or influences are balanced, often referring to chemical reactions reaching a state where the rates of the forward and reverse reactions are equal.