In the Bank Lending Channel, an Important Reason for Output

question 82

Multiple Choice

In the bank lending channel, an important reason for output increases in the short run after an expansionary monetary policy is that

• A)the funds directly available for households and firms to spend will increase.
• B)prices will increase, making increased production more profitable for firms.
• C)the increase in government spending from an expansionary monetary policy increases output through the multiplier effect.
• D)the ability of banks to make loans will increase.

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