The money market (short-run) equilibrium equation states that the demand for real balances, (L(i)Y) is always equal to the supply of real balances (M/P) because __ adjust(s) to ensure that people are willing to hold the entire stock.
a. nominal interest rates
b. real interest rates
c. the price level
d. nominal GDP
Ans: a. nominal interest rates
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If there is unrest in the Middle East that threatens the economic stability of Saudi Arabia, the
A) demand for Saudi Arabian currency will fall. B) demand for Saudi Arabian currency will rise. C) supply of Saudi Arabian currency will fall. D) supply of Saudi Arabian currency will rise.
Monetary policy tools include:
A. The reserve ratio and the discount rate. B. Open market operations and deregulation. C. Open market operations and government spending. D. Income taxes and the discount rate.
The objectives set for the Fed by Congress are:
A. specific on the growth rate for the economy, but vague on all other objectives. B. by design, quite vague, allowing the Fed to really set its own goals. C. specific regarding inflation, but vague on all other goals. D. very specific; this adds to the Fed's accountability.
In the long run, monopolistic competition starts to look like
A. monopoly. B. a market in disequilibrium. C. perfect competition. D. oligopoly.