The Direct Effect of an Increase in the Money Supply

question 101

Multiple Choice

The direct effect of an increase in the money supply is to

• A) raise interest rates as people increase their saving.
• B) increase interest rates as people anticipate higher inflation in the future.
• C) increase aggregate demand as people try to spend their excess money balances.
• D) decrease aggregate demand as people anticipate future economic problems.

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Celebrity Spokesperson

A famous individual who is paid to use their fame to help promote a product or service.

Monopolistic Competitors

Companies that have many competitors but try to differentiate their products from others to gain a competitive edge.

Celebrity Advertising

A marketing strategy that uses the fame of a celebrity to promote products or services, leveraging their influence to reach potential customers.

Expensive Substitutes

Expensive substitutes are alternative products or services that are more costly than the original item they replace, often affecting consumer choices.