Which of the following statements is true?
a. According to the quantity theory of money, any change in the money supply will have no effect on the price level.
b. There is an inverse relationship between the quantity of money demanded and the interest rate.
c. All of the answers are correct.
d. The speculative demand for money at possible interest rates gives the demand for money curve its upward slope.
b
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International trade theory implies that international trade is beneficial to all trading countries. However, casual observation leads to the conclusion that official obstruction of international trade flows is widespread
How might you reconcile these two facts?
Initially, the economy is at point B in Figure 10-3 above. We may conclude that over time,
A) per person saving and steady state investment will remain stable at points C and D respectively. B) per person capital will grow, point D to E since per capita savings exceed steady state investment, point C is greater than point D. C) per person capital will grow, point D to E since per capita savings is less than steady state investment, point C is greater than point D. D) per person saving and steady state investment will remain stable at points D and C respectively.
Refer to Scenario 17.3. Moral hazard arises in this situation because once the firm
A) pays the premium that is based on the 0.001 probability, it has no incentive to spend the additional $80 for the fire protection program, so the true probability of loss is no longer 0.001. B) pays the premium that is based on the 0.01 probability, it has no incentive to spend the additional $80 for the fire protection program, so the true probability of loss is no longer 0.01. C) puts the fire protection program in place, it has less incentive to spend $300 for a premium, leaving the firm underinsured. D) puts the fire protection program in place, it has less incentive to spend $6,000 for a premium, leaving the firm underinsured. E) puts the fire protection program in place, it will consider that a substitute for insurance and not be able to deal with the loss from a fire should it occur.
The marginal cost curve of pollution abatement is
A) downward sloping. B) upward sloping. C) horizontal. D) vertical.