Multiple Choice
Which one of the following statements best describes the monetary transmission mechanism?
A) An increase in personal consumption leads to an upward shift in the AE curve and thereby increases real GDP.
B) An increase in government spending causes the AE curve to shift upwards,leading to a higher GDP.
C) A decrease in imports causes the AE curve to shift upwards,leading to a higher interest rate.
D) An increase in the money supply leads to a lower interest rate,higher desired investment,an upward shift in the AE curve and a higher GDP.
E) A decrease in the money supply leads to a lower interest rate,higher desired investment,an upward shift in the AE curve and a higher GDP.
Correct Answer:
Verified
Related Questions