If individuals are holding more money than they desire
A) they will attempt to reduce their liquidity by using money to purchase goods.
B) they will attempt to reduce their liquidity by using money to purchase interest-bearing assets.
C) they will attempt to reduce their liquidity by converting real money holdings into nominal money holdings.
D) they will keep their holdings constant.
B
You might also like to view...
Refer to Figure 7-2. With the tariff in place, the United States consumes
A) 18 million pounds of coffee. B) 20 million pounds of coffee. C) 26 million pounds of coffee. D) 38 million pounds of coffee.
If the tax multiplier is -1.5 and a $200 billion tax increase is implemented, what is the change in GDP, holding everything else constant? (Assume the price level stays constant.)
A) a $300 billion decrease in GDP B) a $30 billion increase in GDP C) a $300 billion increase in GDP D) a $133.33 billion increase in GDP E) a $133.33 billion decrease in GDP