In the Short Run,an Increase in the Money Supply Causes

question 49

Multiple Choice

In the short run,an increase in the money supply causes interest rates to

• A)increase,and aggregate demand to shift right.
• B)increase,and aggregate demand to shift left.
• C)decrease,and aggregate demand to shift right.
• D)decrease,and aggregate demand to shift left.

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Definitions:

Endowment Effect

Tendency of individuals to value an item more when they own it than when they do not.

Reference Point

A basis or standard for evaluation, comparison, or judgment.

Original Endowment

The initial allocation of income, wealth, resources, or goods that an individual or economy possesses before engaging in trade or production activities.

Behavioral Economics

A field of study blending economics and psychology to explore how people make decisions, often deviating from rationality.