What are the main influences on the quantity of real money that people and businesses plan to hold?
What will be an ideal response?
The quantity of real money demanded depends on four factors: the price level, the nominal interest rate, real GDP, and financial innovation. An increase in the price level increases the nominal demand for money but the quantity of real money demanded is independent of the price level. An increase in the nominal interest rate decreases the quantity of real money demanded, because the nominal interest rate is the opportunity cost of holding money. An increase in real GDP increases the demand for real money, because more real GDP implies more transactions and an increase in the demand for money to finance the transactions. And, financial innovations that make it less costly to get by with less money on hand decrease the demand for money.
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Suppose Jack and Kate are at the town fair and are choosing which game to play. The first game has a bag with four marbles in it-1 red marble and 3 blue ones. The player draws one marble from the bag; if it is red, they win $20 and if it is blue, they win $1. The second game has a bag with 10 marbles in it-1 red, 4 blue, and 5 green. The player draws one marble from the bag; if it is red, they win $20; if it is blue, they win $5; and if it is green, they win $1. Both games cost $5 to play. What is the expected value of the payoff in the first game?
A. $5.75 B. $5.00 C. $4.75 D. $4.50
Luke recently attended a large pop culture convention in another state. What would be the money costs Luke incurred to attend the show?
a. the payments for the pass, airline ticket, and hotel bill b. the time he could have spent improving his musical ability c. the virus he caught at the crowded convention d. the annoyance of airport lines and security checks
The likelihood of successful collective action:
A. generally does not depend on the size of the group. B. can be lower for small groups. C. can be higher for large groups. D. can be lower for large groups.
The focus of the Ricardian model is on how differences in _________ influence international trade patterns.
a. demand b. comparative costs c. absolute costs d. transportation costs