Suppose that households became mistrustful of the banking system and decide to decrease their checking account balances and increase their holdings of currency
Using the money demand and money supply model and assuming everything else is held constant, the equilibrium interest rate should
A) decrease. B) increase.
C) not change. D) increase, then decrease.
B
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Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 3,000 cell phones?
A) marginal revenue B) gross profit C) sales revenue D) gross earnings
Vault cash is equal to $8 million, deposits by depository institutions at the central bank are $2 million, the monetary base is $40 million, and bank deposits are $90 million. The money multiplier is equal to
A) 2.5. B) 3.0. C) 4.0. D) 5.0.
What characteristic of the endogenous growth model is crucial in giving the possibility of sustained growth?
A) It is embodied in people. B) It has constant returns to scale in production. C) It takes time to accumulate it. D) It grows at the same rate as consumption.
Which of the following sequences results from an increase in the price level?
a. the money demand curve shifts leftward, the interest rate decreases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve. b. the money demand curve shifts rightward, the interest rate increases, investment spending and autonomous consumption decrease, the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve. c. the money demand curve shifts leftward, the interest rate increases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve. d. the money demand curve shifts leftward, the interest rate drops, investment spending and autonomous consumption decrease, the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve. e. the money demand curve shifts rightward, the interest rate increases, investment spending and autonomous consumption increase, the aggregate expenditure line shifts downward and there is a rightward movement along the aggregate demand curve.