Which best describes the Keynesian transmission mechanism when the money supply increases?
A) The interest rate rises; this in turn reduces investment spending,which in turn raises total expenditures and shifts the AD curve rightward.
B) The interest rate falls; this in turn stimulates investment spending,which in turn raises total expenditures and shifts the AD curve leftward.
C) The interest rate falls; this in turn stimulates investment spending,which in turn raises total expenditures and shifts the AD curve rightward.
D) The interest rate falls; this in turn stimulates investment spending,which in turn lowers total expenditures and shifts the AD curve leftward.
Correct Answer:
Verified
Q31: An individual buys a bond for $1,000
Q32: Suppose the money market is in the
Q33: What do Keynesians mean when they say
Q34: If market interest rates increase,the prices of
Q35: As the interest rate falls,the quantity
A) demanded
Q37: Suppose the money market is in the
Q38: If the interest rate falls,the opportunity cost
Q39: According to the Keynesian transmission mechanism,an increase
Q40: A general definition of the "transmission mechanism"
Q41: A decrease in the money supply will
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents