Which One of the Following Statements Best Describes the Monetary

question 10

Multiple Choice

Which one of the following statements best describes the monetary transmission mechanism?

• A)An increase in personal consumption leads to an upward shift in the AE curve and thereby increases real GDP.
• B)An increase in government spending causes the AE curve to shift upwards,leading to a higher GDP.
• C)A decrease in imports causes the AE curve to shift upwards,leading to a higher interest rate.
• D)An increase in the money supply leads to a lower interest rate,higher desired investment,an upward shift in the AE curve and a higher GDP.
• E)A decrease in the money supply leads to a lower interest rate,higher desired investment,an upward shift in the AE curve and a higher GDP.

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Definitions:

Services

are intangible products such as healthcare, education, and financial advice that fulfill consumer needs and wants without resulting in the ownership of physical goods.

Tertiary Sector

The segment of the economy that provides services rather than goods, including industries such as retail, healthcare, and education.

Primary Sector

Refers to the part of the economy that is involved in the extraction and production of raw materials, such as mining, agriculture, and forestry.

Farming

The practice of cultivating plants and livestock to produce food, fiber, and other products.