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Ethirajan chakaravarthy
on Dec 16, 2024

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Suppose that the demand and supply of money are initially in equilibrium,and that the demand for money increases.A monetary authority interested in keeping the money supply constant and the interest rate low must:

A) adopt an expansionary monetary policy.
B) adopt a contractionary monetary policy.
C) increase the demand for money.
D) decrease the demand for money.
E) give up pursuing both goals at the same time.

Expansionary Monetary Policy

A policy by central banks to increase the money supply and lower interest rates, aiming to boost economic activity and reduce unemployment.

Interest Rate

An interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Money Supply

The complete volume of cash and similar liquid resources present in an economy at any specific moment, covering bank deposits, cash, and easily liquidated assets.

  • Understand the strategies the Federal Reserve employs to address various economic scenarios.
  • Explore the importance of money demand and its transitions in assorted economic contexts.
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Carrson LangerDec 23, 2024
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