Question

There are three 'links'
in the chain
between monetary policy, inflation, and
GDP. Which is the last 'link' or step in
the chain?
A. Decrease in nominal GDP & real GDP
B. Increasing imports
5
C. The Stock Market

Answer 1

Answer:

An increase in inflation means that prices have risen. With an increase in inflation, there is a decline in the purchasing power of money, which reduces consumption and therefore GDP decreases.10 Dec 2019

Answer 2

In the chain of contractionary monetary policy, the last link in the chain is a A. Decrease in nominal GDP & real GDP.

What chain does monetary policy lead to?

When the Fed engages in contractionary monetary policy, they decrease money supply which leads to inflation decreasing as well.

When this happens, production in the economy slows down which means that both nominal and real GDP will fall.

Find out more on Monetary policy at https://brainly.com/question/13926715.

#SPJ2