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According to the Interest-Rate-Based Monetary Policy Transmission Mechanism, an Increase

Question 270

Multiple Choice

According to the interest-rate-based monetary policy transmission mechanism, an increase in the money supply generates


A) lower interest rates, which causes an increase in planned real investment spending and an increase in aggregate demand.
B) increased spending on consumer goods and services directly, which causes an increase in aggregate demand.
C) an increase in nominal GDP and a change in the price level, but no change in real GDP.
D) an increase in aggregate supply since the supply of money is part of aggregate supply.

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