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


63. Which of the following best describes the cause-effect chain of a restrictive monetary policy? A A decrease in the money

Answer

Question 63 )

Answer : option B ) A decrease in the money supply will rise the interest rate ,decrease investment spending and decrease aggregate demand and GDP.

A decrease in the money supply will rise the interest rate and it will also decrease investment spending as well as it decrease the aggregate demand and GDP . This mainly describes the cause effect chain of monetary policy which is restrictive.

Question 64 )

Answer : option B) aggregate demand curve rightward.

The main aim of an expansionary monetary policy is to shift the aggregate demand curve towards rightward.

Question 65)

Answer: option A ) fall

The prices of government bonds usually fall when the federal banks emerge mainly in a restrictive monetary policy.

Question 66)

Answer : option B) aggregate demand curve leftward.

A restrictive monetary policy is mainly designed inorder to shift the aggregate demand curve towards leftward.

Question 67)

Answer: option D) decrease aggregate demand.

When the sale of government bonds which is mainly done by the Federal Reserve Bank to the commercial bank then there will be a decrease in the aggregate demand.

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