Keynes called the money people hold in order to buy bonds, stocks, or other nonmoney financial assets the:
A. transactions demand for holding money.
B. precautionary demand for holding money.
C. speculative demand for holding money.
D. unit of account demand for holding money.
Answer: C
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
What is most likely used to create a common denominator between countries’ GDP in the long run?
a. GDP deflator b. market exchange rate c. purchasing power parity d. nominal value
For firms in perfect competition, the profit-maximizing quantity occurs when?
a. Marginal revenue equals average variable cost. b. Price equals marginal revenue. c. Price equals marginal cost. d. Marginal costs equal total revenue.
When a good is nonexcludable, then individuals
A) will purchase the good for more than what it cost to produce the good. B) can obtain the benefits of the good without paying for it. C) have an incentive to become free riders. D) will purchase more than the optimum amount. E) b and c