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sgy_89 sgy_89
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7 years ago
Which of the following depicts the process by which a change in the money supply alters output, employment, and prices?
A) An increase in the money supply lowers aggregate demand. The lower level of aggregate demand drives down the interest rate. The lower interest rate leads to an increase in output, employment, and prices.
B) A decrease in the money supply raises the interest rate. The higher interest rate reduces aggregate demand. The lower level of aggregate demand leads to lower output, employment, and prices.
C) An increase in the interest rate lowers the money supply. The smaller money supply reduces aggregate demand and leads to a reduction in output, employment, and prices.
D) An increase in the money supply leads to a higher interest rate. The higher interest rate reduces the level of aggregate demand. The lower level of aggregate demand causes output and employment to fall and also reduces the price level.
Textbook 
Introduction to Economic Reasoning

Introduction to Economic Reasoning


Edition: 8th
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foliogefolioge
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