In a two-asset economy with money and T-bills, the quantity of money that people will want to hold, other things being equal, can be expected to:
a. decrease as real GDP increases.
b. increase as the interest rate decreases.
c. increase as the interest rate increases.
d. all of these.
b
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Suppose the probability of a near-new car being good is 0.4 while its probability of being a lemon is 0.6 . If risk-neutral consumers are willing to pay $14,000 if the car is in good condition and $8,000 if it is a lemon, a risk averse buyer who knows those probabilities would be willing to pay $10,400 for the car
Indicate whether the statement is true or false
When a local grocery store offers discount coupons in the Sunday paper it is most likely trying to
a. reduce prices for all customers. b. encourage literacy. c. encourage arbitrage. d. price discriminate.
In the short run, which of the following is the most likely effect of an anticipated move to a more expansionary monetary policy?
What will be an ideal response?
Which would increase aggregate supply?
a. A decline in productivity b. An increase in business regulation c. A decrease in the capital stock d. Lower business taxes