The demand for real money balances is a function of:
a. the supply of real money balances.
b. the nominal GDP.
c. the nominal rate of interest on alternative assets and the level of real GDP.
d. policy decisions by the central bank.
Ans: c. the nominal rate of interest on alternative assets and the level of real GDP.
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How do changes in the demand for and supply of loanable funds change the real interest rate and quantity of loanable funds?
What will be an ideal response?
If a corporation goes bankrupt, who among the following has first claim on the firm's assets?
A) bondholders B) stockholders C) the state where chartered D) employees
The classical theory of inflation:
A. describes a long-run equilibrium. B. explains the direct relationship between money supply and the price level. C. shows neutrality of money in the long run. D. All of these statements are true.
Which one of the following would NOT increase aggregate demand?
A. a reduction in real interest rates B. tax decreases C. an increase in long-run aggregate supply D. an increase in the amount of money in circulation