Liquidity preference theory is most relevant to the
a. short run and supposes that the price level adjusts to bring money supply and money demand into balance.
b. short run and supposes that the interest rate adjusts to bring money supply and money demand into balance.
c. long run and supposes that the price level adjusts to bring money supply and money demand into balance.
d. long run and supposes that the interest rate adjusts to bring money supply and money demand into balance.
b
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For people who live near a bus route, a subway station, or a commuter rail line, public transportation provides a substitute to driving their own cars
So, for these people, the cross-price elasticity of demand between gasoline and public transportation is A) zero. B) positive. C) negative. D) infinity.
If the U.S. dollar depreciates against the yen below the targeted exchange rate, the U.S. Federal Reserve has to intervene in the foreign exchange market such that:
a. the U.S. demand for yen rises. b. the supply of U.S. dollars rises. c. U.S. exports to Japan fall. d. the U.S. dollar is devalued. e. the supply of U.S. dollars falls.
The term “stagflation” was invented in the 1970s to describe an economy experiencing both
A. deflation and economic stagnation. B. inflation and economic stagnation. C. high inflation and high employment. D. high inflation and high levels of economic growth.
If the economy in the graph shown is currently at point D, we can conclude the:
A. government may want to enact contractionary fiscal policy. B. unemployment rate is likely very low. C. economy is in an economic boom. D. All of these are likely to be true.