A person keeps $500 in his home in order to be prepared for some unforeseen future event. This reflects his
A. precautionary demand for money.
B. asset demand for money.
C. liquidity demand for money.
D. speculative demand for money.
Answer: A
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Suppose the following information describes the economy:GDP2,000Consumption1,500Government Spending300Net taxes400Private saving equals ________ and national saving equals ________.
A. 100; 200 B. 200; 500 C. 100; 100 D. 200; 300
High-powered money consists of
A) bank reserves plus currency held by the nonbank public. B) bank reserves minus vault cash. C) all deposits at the Fed. D) deposits at the Fed plus vault cash.
Keynes believed equilibrium income was:
A. not fixed at the economy's potential income. B. always below the economy's potential income. C. fixed at the economy's potential income. D. always above the economy's potential income.
Diminishing returns to labor implies that eventually the marginal product of labor will become negative.
a. true b. false