According to the interest rate effect, an increase in the price level causes people to:
a) increase their money holdings, which increases interest rates and decreases investment spending.
b) decrease their money holdings, which increases interest rates and decreases investment spending.
c) to increases their money holdings, which decreases interest rates and decreases investment spending.
d) to decrease their money holdings, which decreases interest rates and increases investment spending.
Ans: a) increase their money holdings, which increases interest rates and decreases investment spending.
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What problems can high inflation rates cause for the economy?
What will be an ideal response?
Which of the following would contribute to a sustained high rate of economic growth in the long run in an economy?
A) an influx of immigrant labor into an economy without any accompanying technological change B) a shift of workers in the economy from the agricultural sector to the nonagricultural sector C) increases in labor force participation rates as workers who are out of the labor force pursue rising wages D) growth in capital per hour worked accompanied by technological change
Mrs. Brown decides to keep $7,000 in her checking account in anticipation of rising interest rates. This is an example of the
A. speculative motive for holding money. B. precautionary motive for holding money. C. commodity demand for money. D. transaction demand for money.
The New Deal succeeded in ending the Great Depression
Indicate whether the statement is true or false