Assume the Fed wants to stimulate economic activity through expansionary monetary policy.Which of the following is FALSE?
A)investment spending will increase
B)spending on durable goods will increase
C)aggregate demand will be stimulated
D)the expansionary effect will only be temporary
E)real money balances will increase as we move along the AD-curve from left to right

Question

Quizplus · Accepted Answer

Real money balances do not increase as we move along the AD-curve from left to right; instead, they decrease because the price level rises, reducing the purchasing power of money.

Assume the Fed Wants to Stimulate Economic Activity Through Expansionary