The Following Questions Refer to the graph below. -If the Fed wanted to stimulate business investment,it could do so by A)Increasing interest rates from i₁ to i₀ B)Decreasing the money supply from MS² to MS¹ C)Increasing the money supply from MS¹ to MS² D)Raising the Reserve Requirement E)Increasing the Discount Rate

Question

Quizplus · Accepted Answer

Increasing the money supply from MS¹ to MS² would lower interest rates and increase the demand for loans, making it easier for businesses to borrow money and invest in their operations. This would stimulate business investment. Choices A, D, and E would all increase interest rates, which would likely discourage borrowing and investment. Choice B would decrease the money supply, which could also lead to higher interest rates and reduced borrowing and investment.

The Following Questions Refer to the Graph Below