Assume that the demand for money depends on the interest rate. A decrease in the money supply will cause
A. the interest rate to increase, the quantity demanded of money to decrease, and the velocity of money to decrease.
B. the interest rate to increase, the quantity demanded of money to decrease, and the velocity of money to increase.
C. the interest rate to decrease, the quantity demanded of money to increase, and the velocity of money to decrease.
D. the interest rate to decrease, the quantity demanded of money to decrease, and the velocity of money to increase.
Answer: B
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Refer to Figure 3-4. If the price is $20,
A) there is a surplus of 600 units. B) quantity demanded is zero. C) there is a shortage of 600 units. D) the market is in equilibrium.
When the nominal exchange rate changes from 4 francs per dollar to 6 francs per dollar, the dollar has:
A. appreciated. B. become undervalued. C. depreciated. D. become overvalued.
Refer to the graph. Which of the lines in the diagram represent(s) a progressive tax?
A. Both A and B.
B. D only.
C. C only.
D. B only.
Refer to the given data. If Landia and Scandia fully specialize based on comparative advantage, their aggregate output will be:
Answer the question on the basis of the following production possibilities data for Landia and Scandia:
A. 48 chips and 8 fish.
B. 40 chips and 16 fish.
C. 36 chips and 10 fish.
D. 42 chips and 12 fish.