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Multiple Choice A decrease in the money supply will lower the interest rate, increase aggregate demand, and increase real output. A decrease in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will lower the interest rate, decrease aggregate demand, and increase real output. An increase in the money supply will lower the interest rate, increase aggregate demand, and increase real output.

Multiple Choice A decrease in the money supply will lower the interest rate, increase aggregate demand, and increase real output. A decrease in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will lower the interest rate, decrease aggregate demand, and increase real output. An increase in the money supply will lower the interest rate, increase aggregate demand, and increase real output.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I'm so confused on this question. Wouldn't the second option be correct?. apparantly not. The answer is d. an increase in the money supply will lower the interet rate, decrease aggregate demand, and increase real output.  Like why does on my textbook says "expansionary monetary policy raises real output towards its potential level by increasing money supply and decreasing interest rates" under Breif Review.Please explain and help me. 

Return to c 113 Multiple Choice A decrease in the money supply will lower the interest rate, increase aggregate demand, and increase real output. A decrease in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will lower the interest rate, decrease aggregate demand, and increase real output. An increase in the money supply will lower the interest rate, increase aggregate demand, and increase real output.
Transcribed Image Text:Return to c 113 Multiple Choice A decrease in the money supply will lower the interest rate, increase aggregate demand, and increase real output. A decrease in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will raise the interest rate, decrease aggregate demand, and decrease real output. An increase in the money supply will lower the interest rate, decrease aggregate demand, and increase real output. An increase in the money supply will lower the interest rate, increase aggregate demand, and increase real output.
'put. BRIEF REVIEW 1. Canada's central bank-the Bank of Canada-manages the money supply, serves as a bank for chartered banks and some near banks, acts as the federal government's fiscal agent, and helps to ensure the stability of financial markets. 2. Expansionary monetary policy raises real output toward its potential level by increasing the money supply and decreasing interest rates. The resulting increase in investment and consumption is magnified by the spending multiplier to give an even greater increase in aggregate demand. 3. Contractionary monetary policy reduces real output toward its potential level by decreasing the money supply and increasing interest rates. The resulting decrease in investment and consumption is magnified by the spending multiplier to give an even greater decrease in aggregate demand. Page 347
Transcribed Image Text:'put. BRIEF REVIEW 1. Canada's central bank-the Bank of Canada-manages the money supply, serves as a bank for chartered banks and some near banks, acts as the federal government's fiscal agent, and helps to ensure the stability of financial markets. 2. Expansionary monetary policy raises real output toward its potential level by increasing the money supply and decreasing interest rates. The resulting increase in investment and consumption is magnified by the spending multiplier to give an even greater increase in aggregate demand. 3. Contractionary monetary policy reduces real output toward its potential level by decreasing the money supply and increasing interest rates. The resulting decrease in investment and consumption is magnified by the spending multiplier to give an even greater decrease in aggregate demand. Page 347
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