Your Roommate Is Having Trouble Grasping How Monetary Policy Works

question 178

Multiple Choice

Your roommate is having trouble grasping how monetary policy works.Which of the following explanations could you use to correctly describe the mechanism by which the Fed can affect the economy through monetary policy? Increasing the money supply

• A)lowers the interest rate,and firms increase investment spending.
• B)causes people to spend more because they know prices will rise in the future.
• C)raises the interest rate and consumers decrease spending on durable goods.
• D)lowers the interest rate,raises the value of the dollar,lowers the prices of exports,and raises net exports.

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Definitions:

Body Mass Index (BMI)

A numerical computation that evaluates an individual's weight in relation to their height, used as an indicator of obesity and underweight.

Medium Frame

A body type that falls between a small and large build, often determined by wrist circumference and height.

Desired Weight

The weight an individual aims to achieve or maintain, often through diet and exercise.

Overweight

A condition defined by having a body mass index (BMI) over the normal weight range for one's height, often leading to increased health risks.