Below the equilibrium level of nominal interest rates, there is a _______ of money and money interest rates will tend to _____ as a result.
a. Shortage; fall.
b. Shortage; rise.
c. Surplus, fall
d. Surplus; rise.
b
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A possible reason a nation might impose a protectionist policy such as a tariff is to
A) encourage specialization in the good in which the nation has a comparative advantage. B) protect an infant industry from foreign competitors. C) increase the level of imports. D) slow domestic production.
A positive externality exists and government wants to apply a per-unit subsidy in order to bring about the socially optimal output. Under what condition will the solution (of the subsidy) be worse than the problem (the market failure)?
A. Under the condition that the subsidy is greater than the marginal external benefit (associated with the positive externality). B. Under the condition that the post-subsidy output is not farther away from the socially optimal output than the pre-subsidy output is from the socially optimal output. C. Under the condition that the post-subsidy output is farther away from the socially optimal output than the pre-subsidy output is from the socially optimal output. D. Under the condition that the subsidy is less than the marginal external benefit (associated with the positive externality). E. none of the above
Which of the following is a microeconomic concern?
A) the rate of economic growth in the United States B) the current unemployment rate in the United States C) consumer behavior D) national output of the United States
Suppose the current level of output and the interest rate are such that the economy is operating on neither the IS nor LM curve. Which of the following is true for this economy?
A) Production does not equal demand. B) The money supply does not equal money demand. C) The quantity supplied of bonds does not equal the quantity demanded of bonds. D) Financial markets are not in equilibrium. E) all of the above