In explaining the downward-sloping aggregate demand curve, the real money-supply effect is:
a. When the price index falls, the real money supply falls, causing the real risk-free interest rate to fall, and consumption and real investment to rise.
b. When the price index falls, the real money supply falls, causing the real risk-free interest rate to fall, and consumption and real investment to rise.
c. When the price index falls, the real money supply rises, causing the real risk-free interest rate to fall, and consumption and real investment to rise.
d. When the price index falls, central banks intervene to bring the money supply back to where it was, causing the real risk-free interest rate to fall, and consumption and real investment to rise.
e. None of the above.
.C
You might also like to view...
A kinked demand curve is associated with
a. perfect competition. b. monopolistic competition. c. an oligopoly. d. public utilities.
Which of the following sayings best reflects the concept of opportunity cost?
a. "You can't teach an old dog new tricks." b. "Time is money." c. "I have a baker's dozen." d. "There's no business like show business."
Disposable income is
A) equal to GDP minus the capital consumption allowance. B) that portion of personal income that can be used for consumption and saving. C) the sum of all payments to suppliers of the factors of production. D) equal to national income. E) another term for personal income.
According to the Phillips curve, policymakers would reduce inflation but raise unemployment if they
a. decreased the money supply. b. increased government expenditures. c. decreased taxes. d. None of the above is correct.