As we approached the end of the millennium, many economic crackpots advised citizens to hold large quantities of cash in anticipation of Y2K disasters. What effect would this have had on velocity if many people had been foolish enough to follow this advice?
a. It would have decreased.
b. It would have increased.
c. It would have remained constant.
d. Velocity is unrelated to cash balances.
a
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If the nominal interest rate is less than the equilibrium nominal interest rate determined in the money market, then households and firms
A) are holding less money than they prefer. B) are holding more money than they prefer. C) expect real GDP to increase. D) expect the price level to increase. E) expect the nominal interest rate to decrease.
"Free riding" is a characteristic of which type of good?
A) a private good B) a good that is both rival and excludable C) a public good D) a common resource
Explain the structure of the Federal Reserve System
What will be an ideal response?
"If I didn't go to class tonight, I would save the $2 campus parking fee and spend three hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: a. $0
b. $2. c. $30. d. $32.