Which of the following developments will most likely lead to an increase in the velocity of money?
a. a decrease in the expected inflation rate
b. an increase in money interest rates
c. a sharp decline in using credit cards
d. a decrease in real income
B
You might also like to view...
In the foreign exchange market, when the U.S. interest rate rises, the supply of dollars ________ and the foreign exchange rate ________
A) increases; does not change B) decreases; rises C) increases; falls D) increases; rises E) decreases; falls
Which scenario best explains the Keynesian transmission mechanism when the investment demand curve is vertical?
A) The interest rate falls, investment falls even more, the AD curve shifts rightward, but total expenditures do not change. B) The interest rate falls, investment rises, total expenditures rise, and the AD curve shifts rightward. C) The interest rate falls, investment falls instead of rising, and the AD curve ends up shifting leftward. D) The interest rate falls, but investment does not respond; there is no change in total expenditures and no shift in the AD curve.