Which One of the Following Statements Is the MOST Accurate

question 37

Multiple Choice

Which one of the following statements is the MOST accurate?

• A) A decrease in the money supply lowers the interest rate while an increase in the money supply raises the interest rate, given the price level and output.
• B) An increase in the money supply lowers the interest rate while a fall in the money supply raises the interest rate, given the price level.
• C) An increase in the money supply lowers the interest rate while a fall in the money supply raises the interest rate, given the output level.
• D) An increase in the money supply lowers the interest rate while a fall in the money supply raises the interest rate, given the price level and output.
• E) An increase in the money supply does not usually affect the interest rate.

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Definitions:

Public Policy

Principles and standards regarded by the legislature or by courts as being of fundamental concern to the state and the whole of society.

Original Obligor

The original party responsible for repaying a debt or fulfilling an obligation under the terms of a contract.

Creditor Beneficiary

A third party that benefits from a contract made between two other parties because the contract discharges a debt or duty owed to them.

On Credit

The purchase of goods or services with the promise to pay at a future date.