An increase in the interest rate would induce people to
A) sell shares of stock and buy bonds, but would have no effect on their desire to hold money.
B) get rid of all their money and buy stocks with it.
C) sell their least liquid assets and hold more money in case interest rates go up again.
D) hold a smaller fraction of their wealth in the form of money.
D
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When decision rights are decentralized, typically
a. decisions are being moved to those with less of the relevant information b. decisions are being moved from those with stronger incentives to make good decisions c. decisions are being moved from those with more of the relevant information d. decisions are being moved from those with weaker incentives to make good decisions
If the government decides to spend an extra $5 billion on fighter jets that they would otherwise have spent on road construction, and the MPC = 0.75, what is the effect on AD? a. It has no effect
b. It increases by $5 billion. c. It increases by $15 billion. d. It increases by $20 billion.
What is the difference between a production possibilities curve and a consumption possibilities curve?
What will be an ideal response?
Under sticky prices
A) a fall in the money supply raises the interest rate to preserve money market equilibrium. B) a fall in the money supply reduces the interest rate to preserve money market equilibrium. C) a fall in the money supply keeps the interest rate intact to preserve money market equilibrium. D) a fall in the money supply does not affect the interest rate in the short run, only in the long run. E) a fall in the money supply raises the interest rate to preserve money market equilibrium in the long run.