The relationship between the interest rate and the asset demand for money is
A) positive.
B) inverse.
C) positive sometimes and inverse other times.
D) nonexistent.
B
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In the market for insurance,
A) buyers often have more information than sellers. B) sellers are protected from lawsuits brought by buyers. C) demand is perfectly inelastic because, by law, home owners and automobile drivers must have insurance. D) sellers often have better information than buyers.
What does the Classical model predict about the relationship between a country's budget balance (total revenue minus total spending) and a country's level of real interest rates and investment in a closed economy? Use a graph of the capital
market to illustrate.
An example of a negative externality is
A. a consumer paying too much for an item. B. an apple orchard increasing the number of trees next to a bee farm. C. pollution. D. the Clean Air Act.
Household savings rates:
A. vary enormously across countries. B. seem to be similar for countries within the same continent. C. are impossible to compare across countries. D. are remarkably similar across countries.