As market interest rates rise, people want to hold smaller cash balances, which means that the existing stock of money circulates faster and velocity rises.
Answer the following statement true (T) or false (F)
True
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Other things equal, monetary policy to offset a contractionary gap will tend to
a. Increase the money supply and lower interest rates b. Increase the money supply and increase interest rates c. Decrease the money supply and lower interest rates d. Decrease the money supply and increase interest rates
Crowding out occurs when:
a. an increase in private spending results in a decrease in government deficit. b. an increase in private spending results in an increase in government deficit. c. government deficit spending results in less private spending d. government deficit spending results in more private spending.
Which of the following statements is true?
A. No good can be inferior at all levels of income. B. The income elasticity of demand is negative for normal goods. C. It is possible for a good to be inferior at all income levels. D. It is possible for all of the goods a consumer buys to be inferior.
The value of corporate stocks and bonds traded in a given year is:
a. Excluded from the calculation of GDP because they make no contribution to current production of goods and services b. Included in the calculation of GDP because they make a contribution to the current production of goods and services c. Included in the calculation of gross private domestic investment d. Included in the calculation of net private domestic investment