The Monetary Transmission Mechanism in the IS-LM Model Is a Process

question 28

Multiple Choice

The monetary transmission mechanism in the IS-LM model is a process whereby an increase in the money supply increases the demand for goods and services:

• A) directly.
• B) by lowering the interest rate so that investment spending increases.
• C) by raising the interest rate so that investment spending increases.
• D) by increasing government spending on goods and services.

---

Definitions:

Major Depression

A mental disorder characterized by persistent sadness, lack of interest in activities, and other symptoms that impair daily functioning.

Cognitive Distortion

Irrational, faulty thinking patterns that contribute to emotional distress and mental health disorders.

Dichotomy

A division or contrast between two things that are presented as entirely different or opposite.

All-Or-None Thinking

A cognitive distortion involving viewing situations in only two categories instead of on a continuum, such as completely right or completely wrong.