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1) According to the interest- rate- based transmission mechanism for monetary policy, an increase in the money supply will cause the A interest rate

1) According to the interest- rate- based transmission mechanism for monetary policy, an increase in the money supply will cause the

A interest rate to fall, causing planned real investment spending to fall and leading to an increase in aggregate demand.

B interest rate to fall, causing planned real investment spending to rise and leading to an increase in aggregate demand.

C interest rate to fall, causing planned real investment spending to rise and leading to a decrease in aggregate demand.

D interest rate to rise, causing planned real investment spending to rise and leading to a decrease in aggregate demand.


2)According to the quantity theory of money

A price level changes can best be explained by Keynesian analysis.

B a change in the money supply can lead only to a proportionate change in the price level.

C the rate of inflation is not related to changes in the money supply.

D the velocity of money is the least stable factor in monetary analysis.

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