Along an LM curve at higher income levels the transactions demand for money is __________, so the interest rate must be __________ to equate the demand to the fixed supply of money

A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower


D

Economics

You might also like to view...

Thinking about information as a good, what determines the information people are willing to pay for?

What will be an ideal response?

Economics

If the central bank targets the money stock, then a negative shock to money demand will

a. shift the LM schedule to the right and income will rise above the target level. b. shift the LM schedule up and income will fall below the target level. c. not shift the LM schedule and, therefore, will not displace income from the target level. d. None of the above

Economics

Although the long-run equilibrium price of oil is $80 per barrel, some producers have much lower costs because their oil reserves are relatively close to the surface and are easier to extract

If the low-cost producers have a minimum LAC equal to $20 per barrel, then the difference ($60 per barrel) is: A) an above-normal economic profit. B) an economic rent due to the scarcity of low-cost oil reserves. C) a profit that will go to zero as new oil producers enter the market. D) none of the above

Economics

You are an analyst with a perfectly competitive firm that makes DRAM memory chips. You must manufacture the chips before you know what the demand will be. Based on the above figure, suppose you think demand will be high and manufacture the profit-maximizing quantity of chips. Demand, however, turns out to be low. Because you thought demand would be high, your profit will be ________ than if you

knew demand was going to be low.



A) $200 million more
B) $400 million less
C) $800 million less
D) $200 million less

Economics