According to traditional Keynesians, when the central bank increases the money supply during a recession
A) people will spend all of the money on goods and services.
B) people will borrow more from banks.
C) people will keep most of it in their bank accounts.
D) people will refuse to use the money.
C
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When the interest rate increases, people will adjust their precautionary demand for money
A) downward or upward depending upon the actual supply of money. B) upward. C) not at all. D) downward.
Explain the characteristics of monopolistic competition. Explain how price and output are determined in monopolistic competition. Illustrate your answer with a graph
What will be an ideal response?
The widespread fall in the prices of homes caused consumers to:
A. decrease their spending, as they struggled to pay back debt. B. increase their spending, as they devoted their money to things other than homes. C. decrease their spending, and increase their debts. D. increase their spending, as saving was viewed as a bad investment.
In practice, money supply and short-term interest rates are determined by the
a. Treasury and Commerce departments. b. Federal Open Market Committee. c. Board of Governors. d. House and Senate.