Because a decrease in the nominal interest rate reduces the opportunity costs of holding money, the money demand curve:
A. slopes upward.
B. shifts to the right.
C. slopes downward.
D. shifts to the left.
Answer: C
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Refer to Figure 28-6. If firms and workers have rational expectations, an expansionary monetary policy will cause the short-run equilibrium to move from
A) point B to point A. B) point B to point C. C) point C to point A. D) point A to point B. E) point A to point C.
A steep LM curve implies that
A) an increase in government spending will change output by a relatively small amount. B) a decrease in taxes will change output by a relatively small amount. C) changes in government spending and taxes will have a large multiple effect on output. D) A and B.
Figure 4.4 illustrates the supply of tacos. An increase in the supply of tacos is represented by a movement from
A) point a to point b. B) point c to point b. C) S0 to S1. D) S2 to S1.
A minimum wage law
A) lowers the wage rate of workers who are able to get a job. B) increases employment. C) increases the time spent searching by workers who cannot find a job. D) creates efficiency in the labor market. E) must be set below the equilibrium wage rate in order to have an impact.