According to the interest-rate-based monetary policy transmission mechanism, a decrease in the money supply will
A) lead to an increase in investment spending and a decrease in real GDP which is greater than the increase in investment spending.
B) lead to a decrease in investment spending and an increase in real GDP that is equal to the decrease in investment spending.
C) lead to a decrease in investment spending and a decrease in real GDP which is greater than the decrease in investment spending.
D) lead to an increase in investment spending and a decrease in real GDP that is equal to the increase in investment spending.
Question 2
The relationship between the level of prices and the quantity of real GDP supplied is known as
A) aggregate supply. B) aggregate demand.
C) market demand. D) market supply.
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