According to the interest-rate-based transmission mechanism, a decrease in the money supply will
A) lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending.
B) lead to a decrease in investment spending and a decrease in real GDP which is greater than the decrease in investment spending.
C) lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
D) lead to an increase in investment spending and a decrease in real GDP which is greater than the increase in investment spending.
Correct Answer:
Verified
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