Which of the following best describes the cause-effect chain of an expansionary monetary policy?
A)A decrease in the money supply will lower the interest rate, increase investment spending, and increase GDP.
B)A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease GDP.
C)An increase in the money supply will raise the interest rate, decrease investment spending, and decrease GDP.
D)An increase in the money supply will lower the interest rate, increase investment spending, and increase GDP.

Question

Quizplus · Accepted Answer

An expansionary monetary policy involves increasing the money supply, which leads to a lower interest rate, more investment spending, and an increase in GDP. Therefore, option D is the correct cause-effect chain.

Which of the Following Best Describes the Cause-Effect Chain of an Expansionary