Multiple Choice
Why is the demand for real money balances downward sloping?
A) because the opportunity cost of holding money decreases as interest rates decrease
B) because when the interest rate falls the quantity of money demanded increases
C) because lower interest rates encourage firms and households to increase their money holdings
D) all of the above
E) none of the above
Correct Answer:
Verified
Correct Answer:
Verified
Q41: The liquidity preference theory _.<br>A)distinguishes between nominal
Q42: The AD Curve _.<br>A)demonstrates how central banks
Q43: As the nominal interest rate increases _.<br>A)it
Q44: If government cuts taxes _.<br>A)after tax income
Q45: An increase in inflation leads to higher
Q47: When the inflation rate falls,what happens,and why,to
Q48: The endogenous variable in the liquidity preference
Q49: If the nominal interest rate is above
Q50: When people are holding money in excess
Q51: The MP curve may be used to