According to the interest-rate-based transmission mechanism for monetary policy, a decrease in the money supply will cause the
A) interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
B) interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand.
C) interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand.
D) interest rate to rise, causing planned real investment spending to fall and leading to a decrease in aggregate demand.
Correct Answer:
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Q278: Which of the following statements is FALSE?
A)
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