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3 May 2019
If a country's central bank adopts an expansionary monetary policy, which of the following is most likely to be the effect of such as policy, all other factors remaining unchanged? (Please give a brief explanation for your choice.)
A. An increase in the price level that reduces the real value of households' money holdings and stimulates consumer spending
B. A decrease in the price level that reduces the interest rate and lowers the real value of the domestic currency foreign-exchange market
C. An increase in the price level that stimulates spending on net exports and increases the demand for money
D. A decrease in the price level that reduces the amount of money that people want to hold and decreases the interest rate
If a country's central bank adopts an expansionary monetary policy, which of the following is most likely to be the effect of such as policy, all other factors remaining unchanged? (Please give a brief explanation for your choice.)
A. An increase in the price level that reduces the real value of households' money holdings and stimulates consumer spending
B. A decrease in the price level that reduces the interest rate and lowers the real value of the domestic currency foreign-exchange market
C. An increase in the price level that stimulates spending on net exports and increases the demand for money
D. A decrease in the price level that reduces the amount of money that people want to hold and decreases the interest rate
Deanna HettingerLv2
3 May 2019
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