In Figure 15.4, an increase in the money supply from $65 billion to $100 billion will cause the equilibrium rate of interest to
A. Increase from 5 percent to 7 percent.
B. Decrease from 7 percent to 5 percent.
C. Increase from 3 percent to 5 percent.
D. Decrease from 7 percent to 3 percent.
Answer: B
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According to the traditional Keynesian approach, a tax cut raises aggregate demand because
A) a tax cut always results in a balanced budget. B) taxes are part of the C + I + G + X line. C) taxpayers anticipate a tax increase in the future. D) disposable income available to consumers increases.
Refer to Figure 4.7. You should definitely not ask for points if you believe that ________ of your classmates have asked for points
A) none B) less than five C) five or more D) between one and three
Suppose Bank A holds $200 of reserves, has deposits of $1000, and the desired reserve ratio is 15 percent. How many loans can Bank A create at Bank A?
A) zero, because Bank A has no excess reserves B) $200 C) $50 D) $850
Refer to Table 2-19. What is Betty's opportunity cost of making a bench?
A) 2 statues B) 1/2 of a statue C) 2.8 statues D) 1.75 benches