Suppose the money market is in the liquidity trap and the Fed increases the supply of money. We expect that
A) people will end up willingly holding more money.
B) the excess money holdings will flow into the loanable funds market and there will be a decrease in interest rates.
C) interest rates will increase, since the demand curve for money is upward sloping in this case.
D) eventually, via the transmission mechanism, Real GDP will increase.
A
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Refer to Figure 27-6. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely
A) increase taxes. B) raise interest rates. C) increase oil prices. D) increase the money supply and decrease the interest rate. E) increase government spending.
What has been the market outcome of government-enforced price floors for agricultural products?
A) Not enough food has been produced. B) Farmers have been made worse off. C) A shortage of agricultural products has resulted. D) A surplus of agricultural products has resulted.
Real GDP per capita and other alternative measures of the quality of life are:
a. independent. b. directly correlated. c. poorly correlated. d. inversely related.
The balance of payments ____________
a. is always zero b. is always one c. is positive when the nation has a trade surplus d. is negative when the nation has a trade deficit e. is positive when the nation has a trade deficit