Which of the following explains why the demand for money curve has an inverse relationship between the interest rates and the quantity of money demanded?
A. As the interest rate rises, the opportunity cost of holding money rises, and people respond by converting cash or checking account balances into interest-bearing financial investments.
B. As the interest rate rises, people find it advantageous to borrow money, which increases the quantity of money demanded.
C. As the interest rate falls, the opportunity cost of holding money rises, and people respond by converting cash or checking account balances into interest-bearing financial investments.
D. As the interest rate rises, the demand for money curve shifts outward to the right.
Answer: A
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Lipitor, with few substitutes, should have an own-price elasticity of demand that is:
a. Relative elastic b. Relatively inelastic c. Perfectly inelastic d. Perfectly elastic
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a. rise by $8 million b. rise by $80 million c. fall by $80 million d. fall by $8 million e. fall by $20 million
According to public choice theorists, the primary concern of policy makers is
a. the public interest b. achieving a social optimum for the economy as a whole c. to protect their jobs d. the provision of public goods e. market failure