In November 2010,CNN stated that, \"the central bank will buy 5600 billion in lo

Question

In November 2010,CNN stated that, "the central bank will buy 5600 billion in long-term Treasuries over the next eight months a policy known as quantitative easing," this policy aims to: A decrease in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP. A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP. An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP. An increase in the money supply will lower the interest rate, increase investment spending, and increase aggregate demand and GDP.

Explanation / Answer

Option A) A decrease in money supply will lower the interest rate, increase investment spending and increase aggregate demand and GDP.

This is because of the inverse effect of demand and supply

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