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) causes people to spend more because they know prices will rise in the future.
B) lowers the interest rate, raises the value of the dollar, lowers the prices of exports, and raises net exports.
C) lowers the interest rate, and firms increase investment spending.
D) raises the interest rate and consumers decrease spending on durable goods.
C
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The distribution of income in the United States is
a. more concentrated than the distribution of income in other developed countries throughout the world b. significantly more even than the distribution of income in other developed countries throughout the world c. quite similar to the distribution of income in other developed countries throughout the world d. significantly less even than the distribution of income in most developing countries e. quite similar to the distribution of income in most developing countries
Which of the following is true with regard to economic growth?
a. Real GDP could grow in a society at the same time that real per capita GDP did not b. For a given population, real GDP growth implies real per capital GDP growth. c. If the population grew at the same rate as real GDP, real per capita GDP would not change. d. All of the above are true.