The money market is definitely in equilibrium in which of the following cases?
a) when velocity is constant
b) when the quantity of money demanded equals the quantity of money supplied
c) when the present value is equal to the interest rate
d) when the present value is greater than the interest rate
e) when the interest rate is equal to the price of bonds
Ans: b) when the quantity of money demanded equals the quantity of money supplied
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A consumer has the following utility function for goods X and Y: U(X,Y) = 5XY3 + 10
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Changes in government spending and/or taxes as the result of legislation is called:
a. open market operations of the Federal Reserve. b. discretionary fiscal policy. c. balanced budget operations. d. discretionary monetary policy.