The asset demand for money is downsloping because:
A. the opportunity cost of holding money increases as the interest rate rises.
B. it is more attractive to hold money at high interest rates than at low interest rates.
C. bond prices rise as interest rates rise.
D. the opportunity cost of holding money declines as the interest rate rises.
A. the opportunity cost of holding money increases as the interest rate rises.
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According to Keynesian analysis, if government expenditures and taxes are increased by the same amount, which of the following will occur?
A) Aggregate supply will decrease B) Aggregate supply will increase C) Aggregate demand will be unaffected D) Aggregate demand will decrease E) Aggregate demand will increase
A $10 million open market purchase will increase the monetary base by
A) $10 million. B) $10 million times the money multiplier. C) $10 million divided by the money multiplier. D) an amount between $0 and $10 million, depending on the fraction of the purchase the public wishes to hold as currency.