Money eliminates the need for
A) any government role in the economy.
B) specialization.
C) people to have a double coincidence of wants.
D) the market system.
C
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Suppose that the equilibrium nominal interest rate is 4 percent and the equilibrium quantity of money is $1 trillion. At any interest rate above 4 percent,
A) less than $1 trillion will be demanded and bond prices will fall. B) more than $1 trillion will be supplied and bond prices will fall. C) there is a shortage of money and the interest rate will rise. D) more than $1 trillion will be supplied and the interest rate will rise. E) less than $1 trillion will be demanded and bond prices will increase.
When the interest rate is considered higher than normal, the speculative demand for money ________, the transaction demand ________
A) increases; decreases B) decreases; increases C) remains the same; decreases D) first increases then decreases; remains the same