An autonomous monetary policy easing ________ real interest rates and ________ output in the short run,thereby ________ stock prices.
A)raises;lowers;lowering
B)raises;raises;raising
C)lowers;raises;raising
D)lowers;raises;lowering

Question

Quizplus · Accepted Answer

An autonomous monetary policy easing reduces interest rates, which makes borrowing cheaper and boosts consumption and investment spending. This increased spending raises aggregate demand in the economy, which leads to a higher output level in the short run. Additionally, the lower interest rates make stocks more attractive to investors, leading to an increase in stock prices. Therefore, the correct answer is option C - "lowers real interest rates and raises output in the short run, thereby raising stock prices."

An Autonomous Monetary Policy Easing ________ Real Interest Rates and ________

An Autonomous Monetary Policy Easing Real Interest Rates and