The precautionary demand for money is:
(a) An active balance.
(b) Directly related to interest rates.
(c) Negatively related to income.
(d) An idle balance
Answer: (a) An active balance.
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According to classical economists, government intervention is:
a. necessary to maintain a stable price level in the long run. b. necessary to maintain a stable price level in the short run. c. necessary to maintain full employment in the long run. d. necessary to maintain full employment in the short run. e. not necessary to maintain full employment.
U.S. government laws limit the importation of sugar into the United States. As a result, the U.S. price of sugar is about three times as high as the world price of sugar. U.S. sugar producers strongly support these rules. How would most economists explain this policy?
A. It is an example of a form of sin tax intended to help people with a self-control problem involving sweets. B. The policy is a way of solving an income distribution problem; it redistributes from the rich to the poor. C. It illustrates the public choice view that small gains concentrated to a few producers can be more important politically than large losses spread over many consumers. D. It is an example of the government using cost/benefit analysis to correct a market failure.
When determination of rent is left to the market,
A. that rent price is almost entirely determined by the supply side. B. that price can settle at politically unpopular levels. C. land is fairly distributed among the members of society. D. the supply of land will be perfectly elastic.
A study showing that eating ranch salad dressing might be harmful to one’s health slightly reduces the demand for the product. However, a new bottling method greatly increases the production of this dressing. Considering this, the equilibrium quantity of this dressing would ______.
a. decrease b. increase c. remain constant d. be indeterminate