An increase in the money supply must cause which of the following?
A) a leftward shift in the IS curve
B) a reduction in the interest rate and ambiguous effects on investment
C) an increase in investment and a rightward shift in the IS curve
D) no change in the interest rate if investment is independent of the interest rate
E) no change in output if investment is independent of the interest rate
E
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To analyze monopolistic competition in trade, we make several assumptions about the market. Which of the following is NOT an assumption of monopolistic competition?
a. many firms in the industry b. easy entry and exit c. constant long-run average cost d. increasing returns to scale, falling long-run average cost
A social system in which rights are clearly defined and participants are free to exchange as they choose will tend to allocate resources to
A) their most efficient uses. B) their most highly valued uses. C) uses on which the highest monetary value is placed. D) uses which maximize social welfare. E) uses which produce the greatest good for the greatest member.