If the Fed increases the money supply, then:
a. the interest rate declines and the quantity of money demanded increases
b. the interest rate declines and the quantity of money demanded declines.
c. the interest rate increases and the quantity of money demanded increases.
d. the interest rate increases and the quantity of money demanded declines.
e. the interest rate increases but the quantity of money demanded remains unaffected.
a
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Customers who have long-term relationships with banks
A) pose particular problems with respect to adverse selection. B) pose particular problems with respect to moral hazard. C) often obtain credit at a lower rate or with fewer restrictions. D) are more likely to default or violate restrictive covenants.
Which of the following is a definition of velocity?
a. Velocity = value of final goods and services produced/money supply b. Velocity = real GDP/M c. Velocity = nominal GDP/real GDP d. Velocity = (P Q)/(M V)