Which of the following decreases the demand for money?
A) an increase in income
B) a decrease in real GDP
C) an increase in the price level
D) expectations of higher bond prices
Ans: B) a decrease in real GDP
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Which of the following is not an example of a compensating differential?
a. Chris is a consultant who is paid more than other workers with similar skills because he is required to travel 80% of the time. b. Abby is a teacher who is paid less than other workers with similar skills because she does not have to work during the summer months. c. Ben is a businessman who is paid more than other workers with similar skills because he graduated from a prestigious university with honors. d. Daphne is a skyscraper window-washer who is paid more than other workers with similar skills because of the risk she faces in her daily job.
If banks have $10 million in legal reserves, $70 million in check able deposits, and a reserve requirement of 10 percent, they can still expand the money supply by
a. $10 million. b. $20 million. c. $30 million. d. $50 million.