Author Question: According to proponents of the interest-rate-based monetary policy transmission mechanism, any ... (Read 93 times)

mwit1967 · **on:** Jun 30, 2018

According to proponents of the interest-rate-based monetary policy transmission mechanism, any increase in the money supply

A) causes velocity to increase, and so in the short run nominal Gross Domestic Product (GDP) must increase.
B) will increase Gross Domestic Product (GDP) only if interest rates fall and investment is sensitive to decreasing interest rates.
C) is effective in increasing Gross Domestic Product (GDP) only if it causes an outward shift of the aggregate supply curve.
D) will move the economy from the liquidity trap during times of recession if interest rates fall enough to stimulate private investment.

Question 2

Refer to the table above. Based on this information, we can conclude that Laborland has a ________.

A) current account surplus B) current account deficit
C) trade surplus D) budget deficit