In Monetarist theory, the demand to hold money is:
a. The same as the demand to borrow real loanable funds.
b. Upward sloping because as the real risk-free interest rate rises, people want to hold more money.
c. Rather unstable because it changes greatly with movements in the real risk-free interest rate.
d. Neutral, in the sense that it is independent from all macroeconomic variables.
e. Rather stable and does not change greatly with movements in the real risk-free interest rate.
.E
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One way to approach saving is to have a goal of building a(n) ______________ of three to six month's income
a. Emergency fund b. Umbrella reserve c. Quantity fund d. Production/consumption reserve
Suppose a legislation passed by the government encourages domestic oil exploration thereby reducing petroleum imports substantially. If the cost of production is uniform for all producers, which of the following will be observed in the petroleum market?
a. The world price of petroleum would decline. b. The domestic price of petroleum would decline. c. The world price of gasoline will remain unaffected. d. Crude oil consumption in the domestic and the world market would decrease.