According to the Interest-Rate-Based Monetary Policy Transmission Mechanism, an Increase

question 357

Multiple Choice

According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply generates

• A) lower interest rates, which causes an increase in planned real investment spending and an increase in aggregate demand.
• B) increased spending on consumer goods and services directly, which causes an increase in aggregate demand.
• C) an increase in nominal GDP and a change in the price level, but no change in real GDP.
• D) an increase in aggregate supply since the supply of money is part of aggregate supply.

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