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QUESTION:
Which of the following best describes how an expansionary monetary policy shifts aggregate demand?
a. The money supply shifts right, prices rise, spending falls, and aggregate demand shifts left.
b. The money supply shifts right, prices fall, spending increases, and aggregate demand shifts right.
c. The money supply shifts right, the interest rate rises, investment decreases, and aggregate demand shifts left.
d. The money supply shifts right, the interest rate falls, investment increases, and aggregate demand shifts right.
ANSWER:
d. The money supply shifts right, the interest rate falls, investment increases, and aggregate demand shifts right.
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