According to the interest-rate-based monetary policy transmission mechanism, a decrease in the money supply will
A) lead to an increase in investment spending and a decrease in real GDP which is greater than the increase in investment spending.
B) lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending.
C) lead to a decrease in investment spending and a decrease in real GDP which is greater than the decrease in investment spending.
D) lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
C
You might also like to view...
Keynes advocated the use of taxation and government spending to influence the level of GDP in the short run
Indicate whether the statement is true or false
One of the flaws of GDP is that it
A) includes measures of changes of quality of life associated with producing output. B) includes measures of the underground economy. C) includes only transactions that take place in formal businesses. D) ignores transactions that do not take place in organized markets.