By shifting aggregate demand,monetary policy can affect ________ and ________.
A) real gross domestic product (GDP); unemployment
B) real gross domestic product (GDP); interest rates
C) interest rates; unemployment
D) money supply; real gross domestic product (GDP)
E) money supply; unemployment

Question

Quizplus · Accepted Answer

Monetary policy affects real gross domestic product (GDP) by shifting aggregate demand. When the central bank increases the money supply, it lowers interest rates, which encourages businesses to invest and consumers to spend. This increased spending leads to higher GDP. Monetary policy also affects unemployment by shifting aggregate demand. When the central bank increases the money supply, it lowers interest rates, which encourages businesses to hire more workers. This increased hiring leads to lower unemployment.

By Shifting Aggregate Demand,monetary Policy Can Affect ________ and ________

By Shifting Aggregate Demand,monetary Policy Can Affect and