Multiple Choice
Which of the following is a reason why monetary policy can be effectively used to stimulate aggregate demand in the short run?
A) Monetary policy stimulates aggregate demand by working through the positive relationship between the price level and the quantity of investment demanded.
B) Monetary policy stimulates aggregate demand by working through the negative relationship between the interest rates and the quantity of investment demanded.
C) Monetary policy stimulates aggregate demand by working through the positive relationship between the interest rates and the general price level.
D) Monetary policy stimulates aggregate demand by working through the positive relationship between the interest rates and the quantity of investment demanded.
Correct Answer:
Verified
Correct Answer:
Verified
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