Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The Fed has the power to influence the level of spending in the economy by changing the money supply through monetary policy. Increasing the money supply can lead to increased aggregate demand and GDP, while decreasing the money supply can reduce inflationary pressures. However, the Fed cannot directly change GDP and investment, as these are influenced by a variety of factors beyond monetary policy. A high real interest rate can discourage investment by increasing the cost of borrowing, while a low real interest rate can stimulate investment by making borrowing more affordable. Therefore, statement C is the only correct statement.

Which of the Following Statements Is Correct