In the aggregate demand-aggregate supply model, the short-run effects of an unanticipated decrease in the money supply will be
What will be an ideal response?
higher real interest rates and a reduction in aggregate demand.
You might also like to view...
The key to a successful positive signal is that:
A. it is costly to fake. B. it is hidden information. C. it builds trust between the principal and the agent. D. All of these statements are true.
Empirical studies indicate that the velocity of money tends to increase when interest rates rise. Which of the following best explains why this is true?
a. When the velocity of money is high, banks will increase their lending interest rates. b. An increase in the growth rate of GDP will cause the velocity of money to increase. c. The higher interest rates increase the cost of holding money balances and, thereby, increase the velocity of money. d. Both the velocity of money and interest rates will rise when the inflation rate falls.
Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed in the table. CustomerReservation Price($/Rental)A22B16C12D8E6F4Suppose Island Bikes knows that customers whose reservation prices are at least $10 always rent bikes before noon, while those whose reservation prices are below $10 never do so. If Island bikes can charge a different price in the morning and in the afternoon, then in the afternoon, it will rent out ________ bike(s) and charge ________ per bike.
A. 3; $4 B. 5; $10 C. 1; $8 D. 2; $6
When there is dissaving, APC is __________________.
Fill in the blank(s) with the appropriate word(s).