When the Fed increases the money supply, interest rates
A. rise, causing velocity to fall.
B. fall, causing velocity to fall.
C. rise, causing velocity to rise.
D. fall, causing velocity to rise.
Answer: B
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The slope of a consumer’s indifference curve between two commodities represents
A. her marginal rate of substitution between the commodities. B. the relative prices of the goods. C. her marginal revenue from selling the commodities. D. her marginal revenue product from consuming the commodities.
According to the graph shown, if the economy is operating under free trade, who would be in favor of a tariff?
This graph demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.
A. Domestic producers
B. Domestic consumers
C. Foreign producers
D. Foreign governments.
Which of the following questions would require positive analysis?
a. If the price of cotton increases by 5 percent, should we buy a new harvester? b. If the price of cotton increases by 5 percent, how much cotton should we farm? c. If the price of cotton decreases by 6 percent, what effect will this have on demand? d. If the price of cotton decreases by 6 percent, should we plant more wheat?
Historic data indicate that there is usually a ________ relationship between trade deficits and federal government budget deficits.
A. positive B. zero C. fluctuating D. negative