The Indirect Effect of an Increase in the Money Supply

question 266

Multiple Choice

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

• A) raise interest rates so people will save more.
• B) lower interest rates, which stimulates both investment and consumption spending.
• C) put more cash in people's pockets, thereby increasing aggregate demand.
• D) pay off a portion of the public debt.

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Definitions:

Growth Coalition

A partnership between various stakeholders, such as businesses and local government, aiming to foster economic development and urban growth.

Urban Ruling Class

A social class or group that holds significant power, influence, or resources within urban areas, often shaping policy and cultural norms.

Collective Identity

A shared sense of belonging to a group, characterized by a common culture, interests, or values among its members.

Rural Life

A lifestyle characteristic of areas situated outside towns and cities, often associated with farming and countryside living.