In the Short Run,an Increase in the Money Supply Causes

question 49

Multiple Choice

In the short run,an increase in the money supply causes interest rates to

• A)increase,and aggregate demand to shift right.
• B)increase,and aggregate demand to shift left.
• C)decrease,and aggregate demand to shift right.
• D)decrease,and aggregate demand to shift left.

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Definitions:

Expansionary Gap

A condition where an economy's actual gross domestic product is higher than its long-run potential, leading to upward pressure on prices.

Government Purchases

Spending on products and services by all levels of government, not including transfer payments.

Unemployment Insurance

A government program that provides financial assistance to workers who have lost their jobs through no fault of their own.

Discretionary Fiscal Policy

Government policy that entails the use of government spending and tax policies to influence the economy, based on specific goals or conditions.