Suppose That the Demand and Supply of Money Are Initially

question 94

Multiple Choice

Suppose that the demand and supply of money are initially in equilibrium,and that the demand for money increases.A monetary authority interested in keeping the money supply constant and the interest rate low must:

• A)adopt an expansionary monetary policy.
• B)adopt a contractionary monetary policy.
• C)increase the demand for money.
• D)decrease the demand for money.
• E)give up pursuing both goals at the same time.

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