In the simple liquidity preference model, if the money demand curve is elastic, then:
A. small changes to the money supply will cause large changes to the interest rate.
B. small changes to the money supply will cause insignificant changes to the interest rate.
C. even large changes to the money supply will cause small changes to the interest rate.
D. only large changes to the money supply will cause large changes to the interest rate.
Answer: B
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
By almost every measure of social and economic well-being, for how long after the Civil War (1861–1865) did the South lag behind the rest of the country?
(a) For almost a century (b) For almost a decade before it adapted to life without slavery (c) For only two decades (d) Right down to the present day
When the movie Jurassic Park debuted in Westwood, California, the price of tickets was $7.50. After several months the ticket price had fallen to $4.00. This is an example of
A) peak-load pricing. B) second-degree price discrimination. C) a two-part tariff. D) tying. E) none of the above
The difference in the price the buyer pays and the price the sellers keep in the presence of a tax is called:
A. a tax differential. B. a tax wedge. C. the tax incidence. D. the tax burden.