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Which of the Following Refers to the Interest- Rate Transmission

Question 64

Multiple Choice

Which of the following refers to the interest- rate transmission mechanism?


A) A rise in aggregate demand causes a rise in the money supply and hence a fall in the rate of interest.
B) A rise in the money supply causes a rise in aggregate demand and hence a rise in the demand for money and a rise in interest rates.
C) A rise in the money supply causes a fall in interest rates and hence a rise in aggregate demand.
D) A rise in interest rates causes a fall in money supply and hence a fall in inflation.

Correct Answer:

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