If the nominal interest rate is less than the equilibrium nominal interest rate determined in the money market, then households and firms
A) are holding less money than they prefer.
B) are holding more money than they prefer.
C) expect real GDP to increase.
D) expect the price level to increase.
E) expect the nominal interest rate to decrease.
A
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All of the following are characteristics of game theory except
A) payoffs that are the results of the interaction among players' strategies. B) rules that determine what actions are allowable. C) independence among players. D) strategies that players employ to attain their objectives.
Consider a small open economy in equilibrium with a zero current account balance. What happens to national saving, investment, and the current account balance in equilibrium if
(a) future income rises? (b) business taxes rise? (c) government expenditures decline temporarily? (d) the future marginal product of capital rises?
The Keynesians believe that
a. the Fed played a primary role in driving the Great Depression. b. the Fed played an important role in preventing the Great Depression from being worse than it could have been. c. the Fed played a negative but secondary role in the Great Depression. d. the Federal Reserve did all it could to prevent the Great Depression but essentially played no role in it.
With only two goods, if the income effect is in the opposite direction as the substitution effect but the income effect dominates then the good is
a. normal b. inferior but not Giffen c. Giffen d. There is not enough information to answer.