Everything else held constant,a monetary expansion is characterized by ________ output and ________ interest rates.
A)rising;rising
B)rising;falling
C)falling;rising
D)falling;falling

Question

Quizplus · Accepted Answer

A monetary expansion increases the supply of money in the economy. This increases demand for goods and services, leading to rising output. At the same time, the increase in the money supply lowers the cost of borrowing, leading to falling interest rates. Therefore, "rising output and falling interest rates" is the correct answer.

Everything Else Held Constant,a Monetary Expansion Is Characterized by ________