When the Fed increases the money supply,

A. the interest rate rises and this stimulates consumption spending.

B. people spend less because they have more money.

C. the interest rate falls and this stimulates investment spending.

D. the interest rate rises and this stimulates investment spending.

Question

Business

Deborah Choi

26 October, 02:57

When the Fed increases the money supply,

A. the interest rate rises and this stimulates consumption spending.

B. people spend less because they have more money.

C. the interest rate falls and this stimulates investment spending.

D. the interest rate rises and this stimulates investment spending.

+3

Answers (1)

Know the Answer?

Emerson Massey · Answer 1

D. the interest rate rises and this stimulates investment spending.

Explanation:

When the Fed increases the money supply the interest rate rises and this stimulates consumption spending. This is because when interest rate rise, people tend to invest rate and consume more.

When the Fed increases the money supply,A. the interest rate rises and this stimulates consumption spending.B. people spend less because they have more money.C. the interest rate falls and this stimulates investment spending.D. the interest rate rises and this stimulates investment spending.