What impact does the Fed's raising the interest rate have on the money supply and on the price level?
A) An increase in interest rates raises the money supply and eventually reduces prices.
B) An increase in interest rates lowers the money supply and raises the money demand, which will neutralize price increases.
C) An increase in interest rates will increase investment spending and GDP, which will lower prices.
D) An increase in interest rates reduces the money demand which will slow the growth in prices.
D
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Fiat money is money:
a. accepted by law regardless of its intrinsic value. b. that is not included as part of the M1 money supply. c. that is backed by gold or silver held on reserve by the government. d. such as coins that are made from metal.
The aggregate supply curve in the short run is vertical in __________ version of the AD-AS framework
A) the simple quantity theory of money B) the monetarist C) both the simple quantity theory of money and the monetarist D) neither the simple quantity theory of money nor the monetarist