Which one of these statements is correct?
a. The lower the interest rate, the higher the opportunity cost of holding assets in the form of money.
b. The quantity of money supplied is independent of the interest rate
c. The larger the supply of money, the higher the interest rate, all things equal.
d. Travelers checks and government bonds are equally liquid assets.
e. The demand for money increases whenever the price level decreases.
b
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Expansionary fiscal policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output. B) aggregate demand-aggregate supply equilibrium is above potential output. C) aggregate demand-aggregate supply equilibrium is equal to potential output. D) none of the above.
Modern hedge funds typically make investments that involve
A) hedging. B) speculating. C) acquiring safe, short-term assets. D) focus on stocks instead of bonds.
The tendency of those who are insured to take more risks as a result is a problem of: a. free riding
b. moral hazard. c. adverse selection. d. positive externalities.
Government spending on a transfer payment is illustrated by
a. interstate highways b. elementary and high school education c. community colleges d. land-grant universities e. agricultural subsidies