Why do people demand money? Explain the classical and Keynesian views
The only motive classical economists see for anyone demanding money is to transact day-to-day purchases.
This is the transactions demand for money. Keynesians, however, believe that there are two additional
important motives for holding money: the precautionary motive (when people hold money as insurance
against unexpected needs) and the speculative motive (when people hold money when interest rates are low in order to be in a better position to take advantage of future increases in the interest rate).
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Since the 1970s, the income tax system in the U.S. has become
a. less regressive. b. more aggressive. c. less progressive. d. regressive e. more proportional.
Suppose the market-equilibrium quantity of good x is larger than the socially-optimal quantity of good x. Does the production of good x convey a positive externality or does it convey a negative externality?
An open market sale by the Fed causes the value of the dollar to:
A. rise, increasing net exports. B. rise, reducing net exports. C. fall, increasing net exports. D. fall, reducing net exports.
The marginal revenue curve is the same as the demand curve for the
a. monopolistic competitor b. perfect price discriminator c. oligopolistic price leader d. single price monopoly e. export producer