The Keynesian Cause-And-Effect Sequence Predicts That a Decrease in the Money

question 106

Multiple Choice

The Keynesian cause-and-effect sequence predicts that a decrease in the money supply will cause interest rates to:

• A) fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.
• B) fall, boosting investment and shifting the AD curve rightward, leading to a decrease in real GDP.
• C) rise, cutting investment and shifting the AD curve rightward, leading to an increase in real GDP.
• D) rise, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP.

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