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2 October, 23:15

If there is an increase in the nation's money supply,

A) the interest rate will rise, investment spending will fall, aggregate demand will shift right, real GDP will rise, and the price level will fall.

B) fall, investment spending will rise, aggregate demand will shift right, real GDP will rise, and the price level will fall.

C) rise, investment spending will fall, aggregate demand will shift right, real GDP will fall, and the price level will rise.

D) fall, investment spending will rise, aggregate demand will shift right, and real GDP and the price level will rise.

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Answers (1)
  1. 2 October, 23:38
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    A) the interest rate will rise, investment spending will fall, aggregate demand will shift right, real GDP will rise, and the price level will fall.

    Explanation:

    As more money is pumped into the economy there is a rise in the interest rates and the more the interest rates are the more will be the fall in the investments spendings and thus shifts in the demands will take place and the real GDP rates will increase as the price rates will fall.
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