What is the most common reason people demand money?
A) Each bill and coin is a reflection of important people and events in a nation's history.
B) Since very few of us engage in a flow of transactions, money is our financial safety net.
C) People desire to use money as a medium of exchange when they buy goods and services.
D) They demand money to ensure that the nation's government will not spend too much.
C
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According to the above table, the value of MPS is
A) 0.9. B) 0.1. C) 0.2. D) increasing as real disposable income rises.
If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct?
A) Resources are equally productive at producing either product. B) There is no decrease in the production of one good when the production of the other is increased. C) There is no tradeoff between the two goods. D) A large amount of unemployment must exist. E) Producing more of one good gives the economy a free lunch.
In the foreign exchange market, if the demand for dollars permanently decreases, the Fed can maintain the exchange rate at its old equilibrium level indefinitely by buying dollars
Indicate whether the statement is true or false
If the yield curve is flat for short maturities and then slopes downward for longer maturities, the liquidity premium theory (assuming a mild preference for shorter-term bonds) indicates that the market is predicting
A) a rise in short-term interest rates in the near future and a decline further out in the future. B) constant short-term interest rates in the near future and a decline further out in the future. C) a decline in short-term interest rates in the near future and a rise further out in the future. D) a decline in short-term interest rates in the near future and an even steeper decline further out in the future.