A decrease in the money supply may __________ total expenditures and thus __________ aggregate demand.
A) raise; raise
B) raise; lower
C) lower; raise
D) lower; lower

Question

Quizplus · Accepted Answer

A decrease in the money supply typically leads to higher interest rates, which can reduce total expenditures. This reduction in spending can, in turn, lower aggregate demand.

A Decrease in the Money Supply May __________ Total Expenditures