Which of the following would be expected to increase the demand for money in the U.S.?
A. Financial investors become concerned about increasing riskiness of stocks.
B. The economy enters a recession.
C. On-line banking allows customers to transfer funds between checking and stock mutual funds 24 hours a day.
D. Political instability decreases dramatically in developing nations.
Answer: A
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If aggregate demand turns out to be higher than what was anticipated in an economy, then:
a. the economy experiences a contractionary gap. b. the short-run equilibrium occurs at the potential output. c. the short-run equilibrium occurs at an output level lower than potential output. d. the short-run equilibrium occurs at an output level higher than potential output.
You have a bond that pays $18 per year in coupon payments. Which of the following would result in a decrease in the price of your bond?
A) Coupon payments on newly-issued bonds fall to $15 per year. B) The likelihood that the firm issuing your bond will default on debt decreases. C) The price of a share of stock in the company rises. D) Coupon payments on newly-issued bonds rise to $22 per year.
Describe the four phases of the business cycle.
What will be an ideal response?
Refer to Scenario 9.6 below to answer the question(s) that follow. SCENARIO 9.6: Celeste borrowed $40,000 from her brother to open a car wash. She pays her brother a 5% yearly return on the money he lent her. Her other yearly fixed costs equal $18,000. Her variable costs equal $40,000. In her first year, Amy sold 40,000 car washes at a price of $2.50 per car wash.Refer to Scenario 9.6. Celeste's total fixed costs equal
A. $2,000. B. $18,000. C. $20,000. D. $22,000.