When the rate of interest in the economy increases
A) real Gross Domestic Product (GDP) will increase.
B) the market price of existing bonds will fall.
C) the asset demand for money will increase.
D) the transaction demand for money will increase.
B
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Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential
By providing workers with more machines, equipment and buildings to use in the production of goods, production would decrease
Indicate whether the statement is true or false
In the loanable funds market, if the real interest rate is higher than the equilibrium real interest rate,
A) the demand for loanable funds curve shifts rightward to restore the equilibrium. B) there is a surplus of investment. C) there is a shortage of loanable funds. D) the demand for loanable funds curve shifts leftward to restore the equilibrium. E) there is a surplus of loanable funds.
The quantity theory of money tells us that real money balances are proportional to income, since ________
A) velocity is assumed constant in the short run B) the supply and demand of money are equal in equilibrium C) changes in the quantity of money lead to proportional changes in the price level D) all of the above E) none of the above