When the Fed successfully decreases the money supply, GDP Question 10 options: i

Question

When the Fed successfully decreases the money supply, GDP

Question 10 options:

increases because the resulting increase in the interest rate leads to a decrease in investment

increases because the resulting decrease in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to a decrease in investment

decreases because the resulting decrease in the interest rate leads to an increase in investment

If the money supply is $600, the price level is 2, and real GDP is $300, what is velocity?

Question 1 options:

150

600

1,200

1

300

increases because the resulting increase in the interest rate leads to a decrease in investment

increases because the resulting decrease in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to an increase in investment

decreases because the resulting increase in the interest rate leads to a decrease in investment

decreases because the resulting decrease in the interest rate leads to an increase in investment

If the money supply is $600, the price level is 2, and real GDP is $300, what is velocity?

Question 1 options:

150

600

1,200

1

300

Explanation / Answer

10.

decreases because the resulting increase in the interest rate leads to a decrease in investment

as lower money supply will raise cost of funds for investors to invest which means lower investments that will result in lower economic output or GDP.

we do only first question as per chegg guidlines

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