The theory of liquidity preference is most helpful in understanding
a. the wealth effect.
b. the exchange-rate effect.
c. the interest-rate effect.
d. misperceptions theory.
c
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The demand for money is downward sloping, because at higher interest rates
A) the opportunity cost of holding money is higher. B) the opportunity cost of holding money is decreasing. C) the opportunity cost of holding money is constant. D) the opportunity cost of holding cash is lower.
If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $1 million open market purchase by the Fed will result in what change in loans?
A. An increase of $10 million B. No change C. An increase of $1 million D. A decrease of $1 million
Suppose marginal cost is constant and equal to 100 and market demand is given by Qd = 20- 1/10P. A profit-maximizing monopolist will set price equal to:
A. 150. B. 100. C. 10. D. 300.
Farm price support programs most often take the form of price
A. Floors above the equilibrium price. B. Ceilings above the equilibrium price. C. Ceilings below the equilibrium price. D. Floors below the equilibrium price.