During the Christmas shopping season, the demand for money increases significantly. If the Fed takes no actions to offset the increase in money demand, then nominal interest rates will:
A. remain constant.
B. increase.
C. decrease.
D. equal the real interest rates.
Answer: B
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According to the wealth effect, if real wealth decreases then people
A) decrease their consumption expenditure. B) increase their consumption expenditure. C) do not respond if their nominal wealth does not change. D) decrease their consumption expenditure only if their nominal wealth also decreases.
A beneficial supply shock would cause
A) a movement up the short-run Phillips curve. B) a movement down the short-run Phillips curve. C) the short-run Phillips curve to shift upward and to the right. D) the short-run Phillips curve to shift downward and to the left.
Economist Steven Levitt argues the Supreme Court decision ________ had an impact on reducing crime during the 1990s because it is associated with "wantedness."
A. on gay marriage B. on school bussing C. on abortion D. on prayer in schools
If the price level does not fall or only falls very slowly, then the result will be a prolonged period of
A. inflation whenever supply increases. B. production below potential GDP. C. production above potential GDP. D. rapid price increases when demand changes.