If interest rates are expected to rise, the bond prices will:
A. fall, due to the demand for bonds decreasing.
B. not change until interest rates actually change.
C. move in the same direction as the expected change in interest rates.
D. rise, as people seek capital gains.
Answer: A
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________ might cause the borrowing constraint to become non-binding, even though the consumer still cannot borrow
A) An increase in future (expected) income B) An increase in the real interest rate C) A decrease in current income D) A decrease in the real interest rate
According to classical economists, the only motive for demanding money is
a. to transact business activity b. the precautionary demand for money c. to speculate d. hold M1 e. as insurance against unexpected needs
The simple quantity theory of money predicts that the larger the percentage change in the money supply, the larger the percentage change in Real GDP
Indicate whether the statement is true or false
When the AD curve is relatively flat
A. only monetary policy can be used to increase output. B. only fiscal policy can be used to increase output. C. both fiscal policy and monetary policy can be used to increase output. D. neither fiscal policy nor monetary policy can be used to increase output.