Multiple Choice
The economy is in the horizontal portion of the AS curve,there is no liquidity trap and investment is sensitive to changes in the interest rate.According to the Keynesian transmission mechanism,if the money supply drops the interest rate will __________,investment spending will __________,the AD curve will shift to the __________,and the price level will __________.
A) rise; fall; left; rise
B) fall; rise; right; rise
C) rise; fall; left; not change
D) fall; fall; left; fall
E) rise; rise; left; fall
Correct Answer:
Verified
Correct Answer:
Verified
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