According to Keynesians, for Monetary Policy to Have a Stimulative

question 28

Multiple Choice

According to Keynesians, for monetary policy to have a stimulative effect on GDP, a/an:

• A) increase in the money supply is needed which lowers the interest rate in order to stimulate higher levels of investment.
• B) increase in the money supply is needed which lowers the interest rate in order to lower levels of investment.
• C) decrease in the money supply is needed which lowers the interest rate in order to stimulate higher levels of investment.
• D) decrease in the money supply is needed which causes the interest rate to rise in order to stimulate higher levels of investment.

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