If money demand decreases due to greater use of credit cards, which of the following would most likely happen under a neutralization policy?
a. The money supply would decrease, real GDP would not change, and neither would the interest rate.
b. The money supply would increase, real GDP would not change, and neither would the interest rate.
c. The money supply would decrease, real GDP would increase, and the interest rate would decrease.
d. The money supply would increase, real GDP would not change, and the interest rate would decrease.
e. The money supply would decrease, real GDP would decrease, but the interest rate would not change.
A
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The balance of trade includes trade in
A) goods only. B) both goods and services. C) services only. D) neither goods nor services.
A firm that maximizes profits also
A) is inefficient. B) cuts corners in production processes so that its products are made too cheaply. C) uses the least-cost combination of resources. D) pays input prices lower than other firms do.
Legal limits on prices will tend to cause misallocation of resources because
a. production (or opportunity) cost no longer corresponds to market price. b. people are unable to determine their preferences at the high or low price. c. producers no longer have incentive to be profitable. d. consumers no longer have incentive to spend their income efficiently. e. All of the above are correct.
Which of the following is not considered to be a source of market power for a firm?
A.) Externalities. B.) Patents. C.) Restrictive production agreements. D.) Economies of scale.