When the price level rises and increases the demand for money, the nominal interest rate ________ and the real interest rate ________
A) falls; rises
B) rises; falls
C) rises; rises
D) falls; falls
E) does not change; does not change
C
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If Congress passes legislation reducing Federal Reserve independence, financial market participants are likely to assume that
A) the money supply will decline. B) inflation will increase. C) recession will quickly follow. D) the federal deficit will rise.
If we subtract the number of persons not in the labor force from the civilian noninstitutional population, we get the number of people in the
A) ranks of the unemployed. B) civilian labor force. C) ranks of the employed. D) ranks of discouraged workers. E) none of the above
If all prices, including the price of beef, increase by 3 percent, then the relative price of beef has ________ and inflation ________.
A. remained constant; has not occurred B. increased; has occurred C. remained constant; has occurred D. increased; has not occurred
When the Fed buys bonds in the open market, we can expect the
A) exchange rate to rise and interest rates to fall. B) exchange rate and interest rates to rise. C) exchange rate to fall and interest rates to rise. D) exchange rate and interest rates to fall.