If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is slow, then the

A) interest rate will fall.
B) interest rate will rise.
C) interest rate will initially fall but eventually climb above the initial level in response to an increase in money growth.
D) interest rate will initially rise but eventually fall below the initial level in response to an increase in money growth.


C

Economics

You might also like to view...

Reducing a tariff on a particular good does which of the following? a. It decreases the price of the domestic good to domestic consumers

b. It increases the price of the good to domestic consumers. c. It redistributes income away from domestic producers toward domestic consumers. d. both (a) and (c)

Economics

According to the law of demand, when the price of shoes ________ people will consume ________ shoes.

A. falls, more B. rises, more C. falls, the same amount D. rises, the same amount

Economics

If one job applicant truthfully reveals that they subscribe to an industry publication, the job applicant is

A) using the trade publication as a screening tool. B) using the trade publication as a signaling tool. C) using the trade publication as a form of statistical discrimination. D) using the trade publication for the wrong reasons.

Economics

Related to the Economics in Practice on page 68: Assuming the demand for Baltimore newspapers ________ while the supply of Baltimore newspapers ________, the equilibrium price will definitely decrease.

A. increases; increases B. decreases; decreases C. decreases; increases D. increases; decreases

Economics