Use the following table to answer the next question.Interest RateDemand for Money (billions)7%$200630054004500If the current interest rate is 5%, what will be the equilibrium interest rate if the money supply falls by $100 billion dollars?
A. 6%
B. 5%
C. 7%
D. 4%
Answer: A
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The aggregate demand curve
A) is like individual demand curves in that prices of other goods are held constant. B) is like individual demand curves in that income is constant. C) differs from individual demand curves in that the aggregate demand curve is not downward sloping. D) differs from individual demand curves in that the aggregate demand curve looks at the entire circular flow of income and product while the individual demand curve looks at only one good.
A speculative attack:
A. can occur with any currency. B. can occur to currencies with floating exchange rates. C. can occur to currencies with fixed exchange rates. D. are illegal and no longer occur.
When an exchange rate is determined strictly by the demands and supplies for a nation's currency, it is called
a. fixed b. arbitrage c. floating d. unilateral e. balance of payments
In the 1970s, in response to recessions caused by an increase in the price of oil, the central banks in many countries increased their money supplies. The central banks might have done this by
a. selling bonds on the open market, which would have raised the value of money. b. purchasing bonds on the open market, which would have raised the value of money. c. selling bonds on the open market, which would have raised the value of money. d. purchasing bonds on the open market, which would have lowered the value of money.