One of the major chains of causation in macroeconomic policymaking is government manipulation of ________ in order to affect ________,and thus ultimately ________.
A)the money supply,the interest rate,equilibrium income
B)the money supply,equilibrium income,the interest rate
C)the interest rate,equilibrium income,the money supply
D)equilibrium income,the interest rate,the money supply
E)equilibrium income,the money supply,the interest rate

Question

Quizplus · Accepted Answer

The government can manipulate the money supply in order to affect the interest rate, which has an impact on equilibrium income. By adjusting the money supply, the government can influence borrowing rates and ultimately stimulate or slowdown economic growth. This chain of causation is often utilized by central banks in their monetary policy decisions.

One of the Major Chains of Causation in Macroeconomic Policymaking