Ceteris paribus, expanding loans made by the commercial banking system:
a. changes the composition, but not the magnitude, of the money supply.
b. decreases the money supply.
c. increases the money supply.
d. would help to stabilize an economy experiencing rapid inflation.
Question 2
Which of the following economic theories take into account the rational expectations of people in the economy?
a. Traditional Keynesian economic theory
b. Monetarist economic theory
c. New classical economic theory
d. Classical economic theory
e. New Keynesian economic theory
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