An increase in the expected real interest rate tends to
A. raise desired saving, but lower desired investment.
B. raise desired investment only.
C. raise both desired saving and desired investment.
D. raise desired saving only.
Answer: A
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A relatively steep money demand schedule reflects the assumption that the interest elasticity of money demand is
a. low (in absolute value). b. high (in absolute value). c. zero. d. indefinite.
Suppose there are only two goods – Food (F) and Shelter (S). The demand equations for these two goods depend on their prices, pF and pS as follows:
DF (pF, pS) = 10 – 2pF – pS DS (pF, pS) = 10 – pF – 2pS The supply curves depend only on their own prices: SF (pF) = pF SS (pS) = 5pS Determine the equilibrium price and quantity of these goods.
When the euro ______ in value compared to the U.S. dollar this means that the U.S. dollar ______ in value compared to the euro.
a. increases; increases b. depreciates; appreciates c. appreciates; increases d. depreciates; depreciates
Checkable deposits are money because they are:
A. acceptable in exchange. B. legal tender. C. fiat money. D. token money.