Suppose the Money Demand Curve Shifts Rightward

question 46

Multiple Choice

Suppose the money demand curve shifts rightward.Which of the following is true about the Fed's options?

• A)The Fed can keep the interest rate from rising only if it increases the money supply.
• B)The Fed cannot prevent the interest rate from rising.
• C)The Fed can prevent the interest rate from rising without changing the money supply.
• D)If the Fed expands the money supply,the interest rate will rise even further.
• E)The Fed should reduce the money supply if it wishes to prevent the interest rate from rising.

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Definitions:

Finance Policies

Rules, regulations, and practices that govern the management, administration, and planning of financial resources.

Kahneman and Tversky

Two psychologists renowned for their contributions to the understanding of judgment and decision-making psychology, alongside their work in behavioral economics.

Sure Thing

A situation or outcome that is guaranteed or considered to be a certainty.

Risky Gamble

The act of taking dangerous chances in the hope of achieving a desired result, often with the potential for significant loss.