In the above figure, if the interest rate is 3 percent per year, the quantity of money demanded is
A) greater than the quantity of money supplied, and the demand for money curve will shift.
B) greater than the quantity of money supplied, and the supply of money curve will shift.
C) less than the quantity of money supplied, and the demand for money curve will shift.
D) greater than the quantity of money supplied, and the interest rate will change.
E) less than the quantity of money supplied, and the interest rate will change.
D
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If the long-run aggregate supply curve is vertical,
A) the trade-off between unemployment and inflation cannot be permanent. B) the short-run Phillips curve must be vertical. C) the economy stays at the natural rate of inflation in the long run. D) unemployment and inflation are positively related in the long run.
Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:
A. excess demand will lead the price to fall. B. excess demand will lead the price to rise. C. excess supply will lead the price to rise. D. excess supply will lead the price to fall.
The price elasticity of demand is
A) always negative. B) sometimes positive. C) always positive. D) positive or negative, depending on supply.
Most recessions in the United States since World War II have begun with
A) a decline in residential construction. B) a rapid increase in the price level. C) a substantial number of bank failures. D) a stock market crash.