Suppose the Fed Increases the Money Supply

question 189

Multiple Choice

Suppose the Fed increases the money supply.Which of the following is true?

• A)At the original interest rate,the quantity of money demanded is equal to the quantity of money supplied.
• B)At the original interest rate,the quantity of money demanded is less than the quantity of money supplied.
• C)At the original interest rate,the quantity of money demanded is greater than the quantity of money supplied.
• D)The interest rate must rise for the money market to clear.

---

Definitions:

Quasi-Need Reduction

The concept that certain actions may temporarily reduce the strength of a need without it being completely satisfied.

Psychological Environment

The subjective perception of one's surroundings that can significantly influence mental and emotional states.

Repression

A psychological process where individuals unconsciously block out painful or unpleasant memories, thoughts, or desires.

Cognition

The process of learning and understanding obtained through mental activity, experiences, and using the senses.