when the central bank of montoya increases the money supply, what is the impact?\nchoose 1 answer:\na price…

when the central bank of montoya increases the money supply, what is the impact?\nchoose 1 answer:\na price level decreases\nb consumption decreases\nc investment increases\nd unemployment increases\ne financial capital will flow into montoya

when the central bank of montoya increases the money supply, what is the impact?\nchoose 1 answer:\na price level decreases\nb consumption decreases\nc investment increases\nd unemployment increases\ne financial capital will flow into montoya

Answer

Brief Explanations:

When the central bank increases the money - supply, interest rates tend to fall. Lower interest rates make borrowing cheaper, which encourages businesses to invest more. So investment increases. An increase in the money - supply usually leads to an increase in the price level (not a decrease), and it stimulates consumption rather than decreasing it. It also generally leads to a decrease in unemployment in the short - run as more investment can create jobs. And an increase in the money - supply can lead to a depreciation of the currency, which makes financial capital flow out rather than in.

Answer:

C. Investment increases