Use the following graph to answer the next question.
In the graph, Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money. If the interest rate was 4%, the asset demand for money would be
A. $225.
B. $200.
C. $125.
D. $175.
Answer: B
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Production efficiency requires that
A) the economy be producing on the PPF but the marginal cost of a good does not need to equal its marginal benefit. B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. D) the society be producing at the point of allocative efficiency. E) opportunity costs be minimized.
Suppose the real GDP of Fatonia was $25 million in 2010 . If the population of Fatonia was 0.25 million in 2010, then Fatonia's real GDP per capita was _____ in 2010
a. $200 b. $100 c. $50 d. $150
Policy makers:
A. dislike inflation because it redistributes income. B. dislike inflation because it allows individuals to maintain illusions. C. like inflation because it allows individuals to maintain illusions. D. like inflation because it makes society richer.
In the above figure, if the relevant aggregate demand curve is AD2, what type of gap exists and how large is it?
A. inflationary gap of $500 billion B. recessionary gap of $1 trillion C. recessionary gap of $500 billion D. inflationary gap of $1 trillion