As a result of the financial deregulation that allowed banks to issue new types of interest-bearing checking accounts
A) people are less willing to hold M1 at a given interest rate on alternative assets.
B) the demand for money M1 curve became more stable.
C) the demand for money M1 curve became vertical.
D) the demand for money M1 curve will shift to the right.
D
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Refer to Goods X and Y. When the price of good X rises, what happens to the budget line?
Assume that good X is on the horizontal axis and good Y is on the vertical axis in the consumer-choice diagram. PX denotes the price of good X, PY is the price of good Y, and I is the consumer's income. Unless otherwise stated, the consumer's preferences are assumed to satisfy the standard assumptions. a. The budget line shifts in, with no change in the slope. b. The budget line becomes flatter, and the horizontal intercept moves to the right. c. The budget line becomes steeper, with no change in the vertical intercept. d. The budget line pivots about the horizontal intercept, with the vertical intercept moving up.
In a market system, what must take place for quantity demanded to continually be equated with quantity supplied?
A. Businesses must engage in involuntary, unprofitable exchanges to eliminate surpluses or shortages. B. Tastes and preferences of consumers must adjust to eliminate surpluses or shortages. C. Relative prices must be able to adjust to market clearing levels. D. Price controls must be applied by governments.
When a consumer refuses to sell an antique for less than the price she paid for it despite what the market price is, she is exhibiting ______.
a. anchoring b. the endowment effect c. the gambler’s fallacy d. overconfidence