In the simple liquidity preference model, if the money demand curve is elastic, then:
A. small changes to the money supply will cause large changes to the interest rate.
B. only large changes to the money supply will cause large changes to the interest rate.
C. small changes to the money supply will cause insignificant changes to the interest rate.
D. even large changes to the money supply will cause small changes to the interest rate.
C. small changes to the money supply will cause insignificant changes to the interest rate.
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A major characteristic of structural unemployment that differentiates it from frictional unemployment is that structural unemployment
A) exists only during a recession. B) exists in an expansion whereas there is no frictional unemployment in an expansion. C) is a short-term problem. D) usually lasts longer than frictional unemployment.
Exhibit 6A-3 Consumer equilibrium
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Given the budget line and indifference curves shown in Exhibit 6A-3, at point Z:
A. Px exceeds Py. B. MUx = MUy. C. MRS = Px / Py. D. MRS = Py / Px.