A study has estimated the effect of changes in interest rates and consumer confidence on the demand for money to be: ln M = 14.666 + .021 ln C ? 0.036 ln r, where M denotes real money balances, C is an index of consumer confidence, and r is the interest rate paid on bank deposits. Based on this study, a 5 percent increase in interest rates will cause the demand for money to:

A. increase by 1.8 percent.
B. increase by 0.18 percent.
C. drop by 0.18 percent.
D. drop by 1.8 percent.


Answer: C

Economics

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Economics

The decision about what goods and services will be produced in a centrally planned economy is made by

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Economics

Banks' asset portfolios include state and local government securities because

A) they help to attract business from these government entities. B) banks consider them helpful in attracting accounts of Federal employees. C) the Federal Reserve requires member banks to buy securities from state and local governments located within their respective Federal Reserve districts. D) there is no default-risk with state and local government securities.

Economics

An oligopoly that has two dominant strategies is called a duopoly

a. True b. False Indicate whether the statement is true or false

Economics