In the AS/AD model, an effect of an expansionary monetary policy is to:
A. shift the aggregate demand curve to the left.
B. reduce investment spending.
C. raise interest rates.
D. lower interest rates.
Answer: D
You might also like to view...
What are the primary sources of economic growth? Why are our real incomes and living standards today so much higher than those of our great grandparents 50 or 100 years ago? Why is the income per person so much higher in some countries than others?
If the long-run equilibrium of an economy is disrupted by an unexpected shift to a more expansionary monetary policy, the policy shift will
a. reduce aggregate demand and real output in the short run. b. lead to a higher rate of unemployment in the short run. c. stimulate real output in the short run, but in the long run, its primary impact will be on the general level of prices. d. lead to an increase in the general level of prices in the short run, but in the long run, its primary impact will be an expansion in real output.