The transactions demand for holding money is when people hold money:
a. instead of near money.
b. to transact purchases they expect to make.
c. as insurance against unexpected expenses.
d. to speculate in the stock market.
e. to take advantage of changes in interest rates.
b
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The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.
Refer to Scenario 2.2. Under what circumstances will the equilibrium level of output of dental care increase?
A) If supply shifts more than demand. B) If demand shifts more than supply. C) If both demand and supply shift by the same magnitude. D) If supply and demand both decrease.
The principal-agent problem in corporations exists because the managers of a firm
A) may pursue their own goals even when the result is lower profit for owners. B) may know how to operate the business better than absentee owners do, and yet not be allowed to. C) are generally unable to do the monitoring that would result in the firm's avoiding moral hazard problems. D) are generally unable to do the monitoring that would result in the firm's avoiding adverse selection. E) are generally unable to monitor workers, who do not care about the profits due the managers.
When will stabilization policy be most effective in combating recessions?
a. when AS is flat b. when AS is very steep c. when AS has a moderately upward slope d. when AS has a moderately downward slope.