Suppose U.S.monetary authorities increase the money supply to lower interest rates and stimulate the economy.Which of the following is a plausible scenario?
A) The higher money supply will cause unemployment to fall,encouraging more immigrants to come to the United States and bring their funds,which further increases the money supply.
B) The resulting inflation will cause the dollar to appreciate,encouraging Americans to buy more domestic goods.
C) The larger money supply will attract borrowers from abroad who will come to the United States and so increase aggregate demand.
D) The lower interest rates will cause investors to take their funds to other countries,thereby partially offsetting the increase in the domestic money supply.
Correct Answer:
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