Suppose there are no firms, only the government and households. What would the total demand for funds curve look like in such a world?
a. Downward sloping
b. Perfectly horizontal
c. Upward sloping
d. There would be no such curve
e. Perfectly vertical
E
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Differences in income can be accounted for by differences in: a. age
b. education. c. preferences toward leisure. d. all of the above.
According to liquidity preference theory, if there were a surplus of money, then
a. the interest rate would be above equilibrium and the quantity of money demanded would be too large for equilibrium. b. the interest rate would be above equilibrium and the quantity of money demanded would be too small for equilibrium. c. the interest rate would be below equilibrium and the quantity of money demanded would be too small for equilibrium. d. the interest rate would be below equilibrium and the quantity of money demanded would be too large for equilibrium.