If the Fed adopts a contractionary monetary policy,eventually we can expect:
A)aggregate demand to increase.
B)short-run aggregate supply to decrease.
C)interest rates to decrease.
D)planned investment expenditures to decrease.
E)real Gross Domestic Product to increase.

Question

Quizplus · Accepted Answer

Contractionary monetary policy is used to decrease the money supply and increase interest rates. This makes borrowing more expensive, which in turn decreases planned investment expenditures. Therefore, the correct choice is D.

If the Fed Adopts a Contractionary Monetary Policy,eventually We Can