Government and the Economy Unit Test

Question

13 of 1713 of 17 Items

Question
The economy has been sluggish in recent months with slow economic growth. Which results would lead to a strong and healthy economy?(1 point)
Responses

An increase in the money supply and decrease in interest rates result in more lending and risk.
An increase in the money supply and decrease in interest rates result in more lending and risk.

An increase in the money supply increases interest rates and inflation, which spurs economic growth.
An increase in the money supply increases interest rates and inflation, which spurs economic growth.

A short-term profits and decrease in the money supply cause a decrease in interest rates and increased lending.
A short-term profits and decrease in the money supply cause a decrease in interest rates and increased lending.

A decrease in the money supply increases interest rates, which increases lending.

Answer 1

To promote a strong and healthy economy, the best answer among the provided options would be:

An increase in the money supply and decrease in interest rates result in more lending and risk.

This option suggests that by increasing the money supply and lowering interest rates, consumers and businesses are more likely to borrow and spend, which can stimulate economic growth. The increased lending can lead to higher consumption, investment, and overall economic activity, which is typically associated with a healthier economy.