An increase in the nominal interest rate would
a. encourage people to hold smaller money balances.
b. encourage people to hold larger money balances.
c. force the Fed to reduce the money supply.
d. cause the real interest rate to decline.
A
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When the price of a product increases, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes
A. an inferior good. B. the substitution effect. C. the income effect. D. the rationing function of prices.
Which of the following would not cause the supply curve for gasoline to shift?
A) A change in the wages paid to gas station attendants. B) A change in the number of gas stations. C) A change in the incomes of drivers. D) A change in the cost of refining oil.
Although he is very poor, Al plays the million-dollar lottery everyday because he is certain that one day he will win. Al makes this calculation based upon
A) the frequency of past outcomes. B) subjective probability. C) knowledge of all possible outcomes. D) tossing a coin.
Bert put $75 into an account and one year later had $100 . What interest rate was paid on Bert's deposit?
a. 20 percent b. 25 percent c. 28 percent d. None of the above is correct.