A contraction of the money supply ________.
A. increases both the interest rate and aggregate demand
B. increases the interest rate and decreases aggregate demand
C. lowers the interest rate and increases aggregate demand
D. lowers both the interest rate and aggregate demand
Answer: B
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The basic idea behind moral hazard is that ________
A) some economic transactions impose an additional cost on society B) some economic transactions give rise to an additional benefit to society C) people tend to take more risks if they do not have to bear the costs of their behavior D) people do not reveal their true preference for goods that are non-excludable in consumption
An article in the Wall Street Journal noted the following: Instead of relying on a full-coach, round-trip unrestricted fare of about $2,000 between Cleveland and Los Angeles
Continental [Airlines] since June has offered a $716 unrestricted fare in that market .... Through October, the test resulted in about the same revenue that Continental thinks it would have collected with its higher fare. Source: Scott McCartney, "Airlines Try Cutting Business Fares, Find They Don't Lose Revenue," Wall Street Journal, November 22, 2002. What is the absolute value of the price elasticity of demand on this airline route? A) less than 1 B) approximately 1 C) greater than 1 D) 0
The relationship between the price level and net exports is:
A. negative. B. positive. C. perfectly correlated. D. uncorrelated.
If an economy's aggregate expenditure line crosses the 45-degree line at a level below potential GDP, then there exists an inflationary gap
a. True b. False Indicate whether the statement is true or false