Which of the Following Best Describes the Cause-Effect Chain of a Restrictive

Multiple Choice

Which of the following best describes the cause-effect chain of a restrictive monetary policy?

A) A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.
B) A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
C) An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
D) An increase in the money supply will lower the interest rate, decrease investment spending, and increase aggregate demand and GDP.