Suppose US

Multiple Choice

Suppose U.S. monetary authorities increase the money supply in order to lower interest rates and stimulate the economy. Which scenario is plausible?

A) The higher money supply will cause unemployment to fall, encouraging more immigrants to come to the United States and bring their funds, which further increases the money supply.
B) The resulting inflation will cause the dollar to appreciate, encouraging Americans to buy more domestic goods.
C) The larger money supply will attract borrowers from abroad who will come to the United States and increase aggregate demand.
D) The lower interest rates will cause investors to take their funds to other countries, thereby partially offsetting the increase in the domestic money supply.