In one of the earliest studies on the link between interest rates and money demand using United States data, James Tobin concluded that the demand for money is
A) sensitive to interest rates.
B) not sensitive to interest rates.
C) not sensitive to changes in income.
D) not sensitive to changes in bond values.
A
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Optimal decisions are made based upon the concept of opportunity cost.
Answer the following statement true (T) or false (F)
A rightward shift in the demand curve for domestic assets can be caused by ________
A) a decrease in the domestic real interest rate B) a rightward shift in the supply curve for domestic assets C) a leftward shift in the supply curve for domestic assets D) an increase in the domestic real interest rate
Refer to the indifference curve in Figure 3.3. Which of the following is true about the MRS?
A) It is negative. B) It is positive. C) It is equal to zero. D) It is undefined.
Which of the following statements is false?
a. A decrease in the reserve ratio does not change the monetary base. b. Purchases of foreign currency by the central bank increase the monetary base. c. Discount loans to banks decrease a nation's monetary base. d. All are false. e. All are true.