An increase in real GDP causes the demand for real money balances to
A) rise.
B) fall.
C) remain unaffected.
D) rise, fall, or remain unaffected depending on the interest rate at the time.
A
You might also like to view...
The buyer of a put option on Boeing with a strike price of $75 and an expiration date in November 2003 has the
A) right to buy 100 shares of Boeing at $75 on or before November 1999. B) right to sell 100 shares of Boeing at $75 on or before November 1999. C) right to buy 100 shares of Boeing at $75 on or after November 1999. D) right to sell 100 shares of Boeing at $75 on or after November 1999.
Assume that consumers consider rice and potatoes to be substitutes, so that when the price of rice rises, consumers purchase less rice and more potatoes. When the CPI is computed following the increase in the price of rice, it takes into account
a. the increase in the price of rice. b. the decrease in the quantity of rice purchased and the increase in the quantity of potatoes purchased. c. Both (a) and (b) are correct. d. None of the above is correct.
The process of the investment accelerator involves
a. positive feedback from aggregate demand to investment. b. negative feedback from aggregate demand to investment. c. positive feedback from aggregate supply to investment. d. negative feedback from aggregate supply to investment.
When the Fed lowers the discount rate, it makes it:
A. cheaper for banks to borrow from each other. B. cheaper for banks to obtain additional reserves by borrowing from the Fed. C. more difficult for banks to accept deposits. D. more difficult for banks to extend loans.