Key Concept: Keynesian transmission mechanism The Keynesian cause-and-effect sequence predicts that a decrease in the money supply will cause interest rates to a. fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP. b. fall, boosting investment and shifting the AD curve rightward, leading to a decrease in real GDP. c. rise, cutting investment and shifting the AD curve rightward, leading to an increase in real GDP. d. rise, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP. e. rise, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP.
MACROECONOMICS FOR TODAY
MACROECONOMICS FOR TODAY
Key Concept: Keynesian transmission mechanism
The Keynesian cause-and-effect sequence predicts that a decrease in the money supply will cause interest rates to
- a. fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.
- b. fall, boosting investment and shifting the AD curve rightward, leading to a decrease in real GDP.
- c. rise, cutting investment and shifting the AD curve rightward, leading to an increase in real GDP.
- d. rise, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP.
- e. rise, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP.
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